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GUEST COMMENT Retailers need to gain consumer trust as counterfeiting reaches critical point

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Judy Moon is vice president and global head of revenue at Digimarc

The Food Standards Agency’s chief executive Emily Miles recently sounded the alarm about the risks of counterfeit goods on the grocery manufacturing industry during her speech to the Chartered Institute of Environmental Health. The rise in counterfeit products has become a major issue for both businesses and customers alike recently, and it’s clear that decisive action must be taken if we want to protect consumers from fake merchandise. Of course, counterfeit grocery products specifically pose a grave risk to consumer’s health, but they also pose a real threat to a brand’s reputational value when counterfeit goods are purchased instead of genuine merchandise.

Consumers deserve the highest quality goods possible – which is why it’s in the hands of retailers to ensure cheap fakes do not find their way into unsuspecting hands. The retail industry at large continues to be at risk, with the ongoing proliferation of online shopping leading to a sea of counterfeit items being sold online.

Counterfeiting isn’t going away

According to the Organisation for Economic Co-operation and Development data, the value of counterfeit and pirated goods sky-rocketed from 2013 to 2022, nearly tripling at an estimated $3 trillion. This has had a dramatic financial impact on legitimate retailers resulting in huge losses of profits, as well as reduced job opportunities for American workers amounting to 325,542 jobs lost according to National Association of Manufacturers estimates. Furthermore these statistics point out that federal tax revenues have been affected by more than $5.6 billion, while state and local taxes saw a reduction of almost $4 billion due to counterfeiting operations around the nation.

The economic instability impacting consumers across the globe is leading to shoppers looking for cheap alternatives, and ultimately being swindled by counterfeit products offered through fake websites and third-party listings on ecommerce platforms such as Amazon, eBay and Alibaba. This means consumers are paying for cheaper designer copycats at their own expense – whether retailers and well-known brands miss out on potential profits.

So, what can retailers do to help stem the tide?

Protecting customers and brands against counterfeits requires effective counter measures such as the use of digital watermarks, supply chain transparency and a greater emphasis on building trust with consumers. In an increasingly competitive retail market, it is essential that businesses demonstrate their commitment to protecting consumers and provide quality goods, building trust and loyalty in the process.

Ultimately, it is essential that businesses remain vigilant towards counterfeit products in an uncertain retail climate – only then can shopper confidence be restored, and retailers, customers, and brands all benefit from a safer shopping experience.

Leveraging technology to gain control

The efforts being put toward tackling counterfeit goods are proving successful, however this is a battle that needs to be fought constantly and retailers must continue their efforts to ensure the authenticity of their products.  

So, what can be done to combat the fraudsters? This is where a digital product tag or watermark comes in, creating product passports. These types of tags can contain all sorts of product information, including where and when the product was made, batch or lot number, ingredients, and more. Plus, it can connect the product to the supply chain.

Product digitisation is bringing traceability to the masses

In essence, product digitisation means that each product is given a unique identifier, which could be a digital watermark, QR code, or RFID tag. This identifier allows the product to be tracked throughout its journey.  Product digitisation, AI and connected packaging are no longer ideas being piloted on a few unique product items in select target markets. Connected packaging is becoming the norm as brands strive to meet consumer demand for authenticity, transparency and personalised experiences. Through the digitisation of products at scale and the use of AI and machine learning, brands and retailers not only have a powerful competitive weapon to build direct-to-consumer relationships, but also gain access to unprecedented amounts of data whilst battling counterfeit products.

What’s more, product digitisation can also help brands track their product inventory in real-time, reducing the risk of product diversion. Product diversion occurs when a product is diverted from its intended sales channel to another, often unauthorised, channel. This could be anything from selling products on the black market to selling products past their expiration date.  Product diversion not only hurts a brand’s bottom line but also damages its reputation. Product digitisation can help brands keep tabs on their product inventory, ensuring that each product is going where it’s supposed to and being sold by authorised retailers.

This level of transparency particularly will be critical in the coming months and years ahead. As with the food industry, brands must create transparent supply chains that show consumers where their products are made, who is producing them and how they are being shipped. As consumers become more informed about the products they buy, brands must begin to place a greater emphasis on building trust and customer service. By engaging directly with consumers through their products to provide real-time authentication data, brands can demonstrate that they are serious about protecting their customers and producing high-quality products that are safe to use. Let’s remember that the consequences of counterfeiting for brands are considerable. Maintaining consumer confidence and trust is crucial for growth. So, it is vital for retailers and manufacturers to keep up with the latest technology and develop a comprehensive anti-counterfeiting strategy that prioritises resilience and transparency.

Judy Moon is vice president and global head of revenue at Digimarc

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