Luxury Fashion Is Not the First Victim of Forgeries
By Stefano Pace, Assistant Professor, Department of Management, Bocconi
The Italian market for fake branded goods is worth €7 billion (Censis data). The economic damage forgery inflicts must be piled onto labor exploitation, criminal profits, risks for consumers' health and safety this grey sector is plagued by. Forgery affects almost every single industry: food, multimedia, personal hygiene, spare parts, even pharmaceuticals. Fashionable apparel and luxury accessories are privileged targets for fakers. Unsurprisingly, Italian fashion brands are among the chief victims.
Forged goods are direct, albeit disloyal, competitors of original luxury products. Whoever buys a fake Prada purse won't purchase the real one. Hence a direct damage to Prada. However the damage inflicted by counterfeiting could end up not being limited to original luxury brands. What would happen if the conscious buyer of a forged purse were prevented to do so? Will he/she buy the original purse or purchase another brand? This is the question that Aaron Ahuvia (University of Michigan), Giacomo Gistri (Università di Macerata), Lucio Masserini (Università di Firenze), Stefano Pace (Bocconi), and Simona Romani (LUISS) set out to answer at the preliminary stage of a research study on counterfeiting and consumer behavior.
Early findings show that consumers, in absence of forgery, would not purchase the original luxury brand. The choice would instead fall on purses that are priced within the same range as the faked product, or on entry-level luxury brands, which have lower prestige and thus cost less. This preliminary result is line with the idea that forged goods are bought to enjoy a luxury brand without having to pay the whole price. In absence of fakery, the high price prevents access to the luxury brand and so the consumer re-orients the purchase to cheaper brands. On the other hand, the counterfeited product inflicts a collateral damage on mid-range goods and entry-level luxury products. So forgery is also an attack on medium-priced brands. Counterfeiting thus has a horizontal collateral effect, in addition to the direct effect targeting the imitated luxury brand.
Summing up, the propensity to buy the original luxury product is not significantly influenced by the availability of a phony replica. Those who are inclined to buy luxury purses are unlikely to change idea, even if there's the possibility of buying a similar one at an incomparably lower price. Similarly, whoever is not inclined to buy a luxury brand is not likely to change attitude, if a cheap forgery becomes available. The two market segments seem to be distinct and separate. Since counterfeiting also affects less prestigious brands, it's in the interest of the whole industry to tackle it head on.