The RealReal released its 2024 Luxury Resale report this week, highlighting the “top brands and trends shaping the market.” The San Francisco-based resale giant stated that data derived from its sales over the past year indicates that “investment-worthy pieces, such as high-value fine jewelry and timeless handbags dominated, alongside trends ignited by TikTok and the revival of nostalgic TV shows in the cultural spotlight.” More broadly, the company’s President & Chief Operating Officer, Rati Sahi Levesque, said, “Fashion is undergoing a seismic shift. Trends less frequently flow from the top (runways) and are now emerging from the ground up through things like TikTok and everyday street style.”
In addition to identifying Prada as Gen Z’s “most searched-for” brand, and Chanel and Gucci handbags as the top two most-searched-for items across all demographics, The RealReal (“TRR”) revealed trends in trademarks – or more specifically, counterfeiting. According to TRR, the reverberations of the onset of “quiet luxury” are still being felt – and the impact of the trend that eschews bold branding is not only being seen in the products that consumers are buying but the products that counterfeiters are targeting.
While the most commonly counterfeited items that land before TRR’s authenticators (namely, bags from Hermès, Chanel, Louis Vuitton, and Gucci) are “still the usual suspects” when it comes to the fakes that it is fielding, TRR says in its report that it has seen “a major uptick this year” in “knockoffs” from companies like Celine and The Row as a direct result of the increase in demand for “quiet luxury” products.
TRR’s report comes against the background of enduring demand for less logo-heavy wares and a corresponding rise in “dupes” of goods from the likes of The Row, Celine, Loro Piana, etc. With that in mind and in light of the increasingly sophisticated state of counterfeit goods (heavily branded or not), companies are taking multi-faceted approaches to protecting themselves and their standout products. These efforts have come – in no small part – by way of a greater embrace of technology.
For example, over the past couple of years, “brands, including Loro Piana, Louis Vuitton, and Maison Margiela, have launched services built on Aura Consortium’s blockchain that allow customers to verify that their item is not a knockoff,” according to Bloomberg. “The hope is that tracking handbags, coats, watches, and diamond rings, [among other luxury products] this way could be a game changer in the industry’s fight against the ballooning counterfeits market.”
> The theory behind efforts like the Aura Blockchain Consortium, per Bloomberg: “Giving customers a more reliable way to prove their products are real could help raise the appeal of originals, while making it harder to sell fakes on the secondhand market.”
In addition to approaches that link physical products to blockchain-hosted entries that detail the provenance (and thus, the authenticity) of those products, artificial intelligence is (unsurprisingly) playing a role, as well, as brands look to newer, proactive online monitoring tools built around AI.
Service providers in this space tout AI as being an ideal mechanism for tackling the incessant issue of counterfeits because of its ability to synthesize vast amounts of data (which is necessary to enable the models that power AI generators to run effectively), consistently learn from new information, identify patterns, etc. Among other things, advanced AI algorithms can “quickly and accurately identify counterfeit and cloned products,” thereby, allowing companies to “authenticate products and packaging swiftly, ensuring that counterfeits are rapidly identified and removed from the supply chain,” according to brand protection and product security provider iTRACE Technologies.
As for how such authentication can work, Entrupy – which provides companies with tools to “secure inventory, protect supply chains, and add trust to transactions at retail and resale” – lets companies upload product images that are compared (using machine learning algorithms) against a database containing millions of records from known authentic and counterfeit products to determine if a product is the “real thing” or not.
The use of technology is critical as not only is the volume of counterfeiting goods in the market growing, but the quality and sophistication of the counterfeits at play continues to grow, as well. TRR speaks to this point in its report, statingthat the counterfeits that it is seeing – which it refers to as “superfakes” – are “often jarringly similar to the real thing, with an attention to detail authenticators have seldom seen before.”
> Third party tech is also critical for secondary market entities since few brands are willing to share authentication information with them, an issue that we dove into recently.
Burges Salmon LLP’s Emily Roberts and Holly Webb echoed this in a recent note, stating that “counterfeiters have become ever more sophisticated over time,” and in fact, are using AI, themselves, “for non-legitimate purposes, such as to generate fake photographs, videos, and even reviews to legitimize their counterfeit or infringing goods.” However, they note that AI tools and other technologies “are developing quickly and can greatly assist” companies, nonetheless. For example, “behavioral analytics can be used to identify goods that are most likely to be targeted by counterfeiters, AI assistants can scan goods in real time to determine authenticity, and AI can assist with supply chain tracking.”
While AI will “not able to solve the issue of counterfeit goods entirely,” Robert and Webb aptly assert. “For brand owners, the key is to have a cost-effective strategy in place for monitoring and enforcing IP rights. This includes at all stages of the customer journey, online and offline, but with a particular focus on online e-commerce marketplaces, preventing the consumer from purchasing infringing products in the first place.”