How blockchain is combatting the counterfeit market
Many people associate blockchain solely with cryptocurrency but this technology is now helping luxury apparel brands maintain authenticity and integrity with consumers through the use of quick response (QR) codes. Erik Swords, manager at Mellon, part of BNY Mellon Investment Management, weighs in.
Millennials are one of the largest generations in the world, making up a quarter of the globe’s population.¹ They also spend the most on luxury goods², with Generation Z (ages 16-23) and Generation X (ages 39-54) shortly behind them. In an increasingly competitive marketplace, brands want to establish the authenticity of their products and protect the integrity of their brands. Blockchain technology is looking to be the answer that gives consumers the security of knowing if the products they are buying are genuine or counterfeit.
“The immutability of blockchain gives companies the ability to track items throughout the supply chain, helping them to confirm authenticity and increase transparency, enhancing consumer confidence,” says Swords.
While this technology will serve the primary market by tracing raw materials and tracking who is purchasing the product at the initial point of sale, it will also benefit the secondary market. Many people use popular selling and trading websites today along with applications on their phones to buy new or barely used luxury items from other retailers or individuals. Not having to pay full price while contributing to sustainability by re-homing others’ old or discontinued items can be a win-win for buyers and sellers. But, whether buying new or used luxury goods, assuring their authenticity is paramount in protecting consumers and producers alike. Swords goes on: “From hand bags to luxury cars, we’re seeing blockchain emerge as an important supply chain tool with the potential to mitigate fraud.”
US luxury goods company Ralph Lauren, for example, is introducing digital product IDs that will allow consumers to scan product labels with their smartphones, giving them the ability to authenticate a product within seconds.³ High-end auto manufacturers are also beginning to use blockchain to track the authenticity of cars on the secondary market. “The growing popularity of using unique QR codes on luxury apparel is just one example of how blockchain technology is increasing among luxury brands,” Swords says.
¹ The Financial Times: ‘The millennial moment – in charts’, 16 December 2019
² Global Web Index: ‘The Luxury Market in 2019: What Brands Should Know’, 16 December 2019
³ Apparel Insider: ‘Ralph Lauren digital tags to combat fakes’, 16 December 2019