How RFID Can Help the Fashion Industry Win the War Against Counterfeit Goods

Fashion lovers know it costs to be stylish, which is why so many counterfeit operations have emerged to allow people to enjoy the cachet of top brands without paying top-brand prices. With operations selling not only obvious ‘close copies’ but also counterfeits presented as if they are genuine goods, the financial impact on the industry is considerable. It is estimated that globally a colossal €26 billion is lost to counterfeit goods each year, according to analysts Statista. In terms of market share, the EU estimates that to 10% of clothing, footwear and accessories sales are absorbed by counterfeit products.

These damages have a widespread effect beyond the direct financial loss inflicted on the fashion industry. They can undermine the perception of a brand’s quality and create financial loss to individuals who have unknowingly bought counterfeit goods. While the economic damage to the fashion industry can jeopardise the job security for some of the 300 million people employed within the sector (source Ellen MacArthur Foundation).

Another issue within the fashion industry is grey-market sales, in which genuine products are sold through unauthorised channels. For companies investing hundreds of thousands of dollars on fitting out branded stores it can be hard to compete if your own products are available at discount prices, through generic high-street stores or online. Grey marketeers can also take advantage of pricing variations between geographic regions to make money ¬– while eroding the brand owner’s control over pricing, market distribution and profitability.

How distribution is key to control counterfeiting

Controlling counterfeiting and grey market sales starts with knowing how your products are distributed. The industry cannot rely only on barcodes for this, as barcodes are themselves subject to easy duplication. Furthermore, barcodes can easily be obscured by packaging materials, which makes scanning the codes at each link in the value chain incredibly labour intensive or simply impossible.

One way around these issues is to apply RFID tags at item-level. With each tag possessing a unique serial identifier that is impossible to duplicate, this enables the supply chain to easily verify a product’s authenticity. Additionally, companies can use the serial identifier as a basis of ‘product pedigree’ within their manufacturing and logistics systems, documenting when and where the product was made and which country it should be distributed in.

As RFID tags can be scanned from a greater distance and do not require line of sight to be verified, packaging does not have to be opened for scanning. This allows RFID tags to be scanned in batches, creating nearly unprecedented productivity with almost 100% accuracy in many scenarios. Because the tags do not require visibility to be read, they can be hidden within packaging or embedded inside products, making it harder for counterfeiters to locate or extract them.

A solution to track and trace merchandise progress in the value chain

The continued erosion of brand values by counterfeiters and grey marketeers is making the fashion industry, take a closer look at the advantages of RFID tags and the scanning and logistical infrastructure that goes with them. For example, Murata’s id-Bridge™ is a scalable and cost-effective platform for the end-to-end management of RFID systems. It enables brand owners to track and trace the progress of merchandise throughout their value chain, as well as allowing for integration with existing enterprise resource planning systems. While RFID tags are more expensive than simple barcodes, a well thought-through RFID-based tracking system can save companies money by helping them suppress counterfeiters and grey marketeers. When it comes to many black and grey market goods, the cost of the products are orders of magnitude higher than the cost of tags. In many cases, the comparatively small outlay of RFID technology can play a vital role in regaining this considerable loss.

One company that has deployed Murata’s RFID solutions is Italian fashion brand Liu Jo, which installed the system at its distribution hub in northern Italy. Their implementation included RFID ‘tunnels’ that can read products’ RFID tags at high speed as they enter and exit the hub. The tunnels can read between 10 and 300 items in a box in a few seconds, with close to 99.5% accuracy. The tunnels work with Murata’s id-Bridge™ 4.0 web-based management software, which compares the list of products expected in each box with what the tunnel has read and then flags any discrepancies.

The system was first used on the accessories for the brand’s summer and autumn 2022 collections and is now being applied to its apparel as well. The id-Bridge™ platform takes in orders and shares them with the service bureaus so that they can generate RFID tags to go on each item. The system enables Liu Jo to have constant visibility and control over the status of each order. Additionally, manufacturing can apply a unique RFID tag to each product, allowing it to be uniquely identified and linked to its destination market before leaving the factory.

RFID in the war against counterfeit goods

As counterfeiting and grey marketing becomes more prevalent, fashion retailers will have to take more active steps to protect their brands and overall revenue. RFID-based logistics offer a strong defensive tactic, enabling full traceability from purchase order to the final customer. Allowing for the easier identification of fake goods, helping to provide the industry with an effective response to evolving grey markets.

In many instances, the cost of deploying RFID technology is weighed against current barcode solutions. But, perhaps for a clearer picture of the benefits of RFID, its deployment cost should be assessed against the value of potentially recoverable losses caused by counterfeiting and grey marketing. While it is impossible to recover 100% of the damages from these illegal activities, for many companies the recovered costs will far exceed the outlay of RFID, such is the effectiveness of the technology if deployed correctly.