Countering Counterfeits: Why Item-Level Visibility and Unique IDs Are Key
In June, the Department of Homeland Security projected nearly $1 billion worth of counterfeit luxury goods to be seized between the 2020-2021 fiscal years leading up to the end of September. Shortly after, over $12 million in counterfeit goods were seized at the Los Angeles-Long Beach ports area. While these challenges have plagued the industry for years — especially for highly desired luxury brands — COVID-19 has certainly exposed more ways for bad actors to take advantage of the global supply chain disruption and weak spots of entry for black and gray market activity. The threat to brand reputation and revenue remains an obstacle brands must continue to overcome.
Although the term counterfeit conjures images of downtown New York City or L.A. streets once lined with Prada handbags or Chanel sunglasses, designer labels aren’t the only ones at risk anymore. In fact, those most susceptible these days are what we call “super brands” — i.e., those rising in demand and popularity. Still part of the pricier end of the spectrum but accessible to larger demographics, this includes the likes of top-line sneaker labels, high-end athleisure and sportswear, and mid- to high-end jeans. For these brands, success has been dependent and centered around strong brand identification, authentication, well-known quality, and customer experience, and any potential damage to those elements could result in serious fallout of customer loyalty and bottom line results.
So how can these “super brands” and the industry at large counter the counterfeits?
One way is through item-level technology and transitioning every unit to have a digital twin. Item-level 2D barcodes combined with RFID tech serves as a reliable and scalable way for brands to gain more control and visibility throughout the entire unit’s life, enabling anticounterfeit capabilities. While historical SKU-level inventory management may have at one point been sufficient, amidst incredible demand, the increase in omnichannel models, and disrupted supply chains, inventory accuracy based on SKU-level technology now averages below 70 percent and is a recipe for detrimental inaccuracies and inefficiencies. Real-time, item-level inventory management and capabilities that offer greater visibility throughout entire supply chain will not only increase count accuracies and drive more efficient operations, but also reduce shrinkage and provide tangible sustainability benefits. Item-level systems also inform and deepen the customer experience by providing access to secure unit lifecycle history, including where it was made, what material it was made from, when it was first sold, and if it was resold.
Unique IDs will become the most critical piece in the counterfeit puzzle. By using tamperproof data carrier technology on the units, unique IDs also help brands maintain a connection between a unit and the consumer through the unit’s first, second and third life as more items are being resold in new circularity models, and protect against black and grey market actions. For example, if a consumer wants to return a jacket to a high-end outerwear company, that company will be able to scan the tag, authenticate it through the item’s unique serial number, and determine if it’s an applicable return. If the serial number isn't legitimized — i.e., the item never went through the brand’s supply chain — the brand will be able to quickly identify a counterfeit purchase.
In addition to RFID and 2D barcode technology, Near Field Communication (NFC) can drive further brand protection and consumer engagement. With the use of NFC and 2D barcodes, only authentic products can be read by the readers and products can be authenticated with an equipped smartphone. Even beyond technological solutions, materials within tags/data carriers and the products themselves can drive authentication, such as unique threads that fluoresce at a certain frequency and are embedded into garments providing traceability to know where an item is located within the supply chain at all times.
While anti-counterfeiting has and continues to pressure brands across the globe, having the proper technology in place, including the right data carrier, products, readers and software, has proven to be a reliable way to combat these issues. To get there though, retailers and brands must fully embrace the shift to item-level management methods to implement the solutions that will successfully protect them for years to come.
Dean Frew is the chief technology officer and senior vice president of RFID Solutions at SML Group, the leading RFID solutions provider.