How retailers can deal with counterfeit luxury?

Companies like Ray-ban, Louis Vuitton, etc have implemented numerous activities to stop counterfeit goods. In this scenario, technologies like blockchain is an effective measure to address the challenges in the sector.
How retailers can deal with counterfeit luxury?


First of all, let us understand the concept of block chain. Simply put, it is a distributed ledger secured by encryption which obviates the need for verification by a central authority. It builds a decentralized database of different entries using complex algorithms and peer to peer network of computers. This makes it difficult for anyone to hack or get access to the information. Being a shared open system enables all parties involved in an exchange to have an open access to the digital record of transactions which cannot be altered.

Thus, block chain can be characterized as robust and adaptable, secured and distributed, and fit for all types of use cases in any sector- financial, retail, healthcare, and insurance and so on.

In this article, we will look at the luxury retail sector.


The luxury retail industry is increasingly being shaped by the millennial generation who are highly impulsive and go by the latest trend and not by necessity. Highly engaged by digital, these consumers demand more as they possess information in a click. Influenced by global competition and increasing acceptance of e-commerce, the brands face a plethora of challenges. A report by Assocham states that globally counterfeit luxury products market accounts for 7 per cent of the overall luxury market and the market in India likely touched INR 6000 crores in 2016. Copies of luxury products such as bags, apparels, watches, shoes, belts, pens, perfumes and jewelry are found in abundance. The proliferation of counterfeit products online has increased multifold forcing brands to take to building their own e-commerce platforms. Companies like Ray-ban, Louis Vuitton, etc have implemented numerous activities to stop such malpractices. In this scenario, blockchain is an effective measure to address the challenges in the sector.

Future contribution of blockchain to luxury retail

Getting rid of counterfeiting:

The black economy, in respect of luxury goods is posing a nightmare for the manufacturers as more and more of such counterfeit products are entering the market. The global luxury industry is worth $320 billion of which the fake luxury product market stands at $22 billion. Finding out ways to reduce and stop this parallel business gives rise to significant business cost and also consumers are not at peace with their product authenticity. The erosion of brand trust is even more damaging.

This problem is solved by blockchain. It enables assigning a unique ID to the product which helps verify if an item is genuine or not. Products are tagged with Radio-frequency identification (RFID) technology at their origin in the factory and that data stored on an immutable shared ledger where it could be tracked through a supply chain, consumers could then buy with confidence knowing the goods were legitimate. Transactional information made available to the consumer increases trust in the brand which reduces the trust tax expenses for the manufacturer. The tagging of the product also enables tracking of the product in case it is stolen. Product authenticity and quality assurance are maintained thereby.

Product attachment:

Today, customers are becoming increasingly demanding. They believe concepts like “organic”, “tailor made” and “boutique” are just marketing stunts to sell more of a product. This belief can be detrimental to the brand and needs a lot of investment to convince the consumer. However, if the consumer can see the above himself, he will become a preacher for the brand. This can be easily addressed by blockchain.

Blockchain helps maintain a record of who currently owns the product. Tracking the product and its past, enables the brand to tell a story about the product, its history, how it originated and it’s ingredients or make. Customers not only get information on the authenticity of the product but also the sustainability practices of the brand. The transactions also depict all the supply chain practices of the brand. This gives a sense of satisfaction to the consumer as he is well informed of his product. Customers get an indisputable proof of the provenance and authenticity at every step of the supply chain. This can also be used as advertisement and for marketing as well.

Supply chain

Supply chain dynamics have changed drastically over the years. The process has become compressed and automated leaving less scope of intervention for individuals. This in turn has led to increase in conflicts and trust issues between manufacturers, suppliers and consumers. Manufacturing organizations spend large amounts of time, money and effort on negotiation, communications and paper work to overcome absence of trust.

Blockchain can dramatically improve visibility into complex retail supply chains, such as information on product status and location, visibility into the entire value added process, and also for advanced analytics.

1.      Tracking ad Monitoring of High Value Goods-

a.      Transaction are saved in the form of permanent records that can’t be altered and are well suited for tracking high value goods where buyers can track the history and story of the product

b.      Large amount of data gets stored through complex supply chain which helps identify and track the location of a particular product and its stage of completion

2.      Supply chain visibility and sustainability-

a.      Every step is recorded as transaction and therefore gives a full picture of the process. Trials prove that the necessary steps have been taken towards all stakeholders

b.      Helps justify premium pricing, while fostering sustainability

c.       Meet CSR requirements

3.      Analytics-

a.      Supply chain efficiency and effectiveness - recording every transaction allows a huge set of data to be analyzed and metrics to be measured basis of this reliable data

b.      Consumer analytics - Blockchain allows quality analysis of consumer behavior and habits

The use of blockchain can make the entire value chain faster, secured and cheaper and give insights to both the manufacturers and the ultimate consumers. It can empower individuals to track the entire journey of the item from assembly to vendor.


The recent display of blockchain technology at the Shanghai Fashion Week asserts the acceptance of technology in the luxury retail sector.  Core influences and values of brands are increasingly coupled with technology to deliver maximum value to ultimate consumer. Blockchain with its ample opportunities to solve the major key problems in this sector is something yet to be explored at full scale.

The article has been pen down by Prerna Goel, Business Analyst, Altimetrik.


Publish Date
Not Sponsored
Live: People Reading Now