The annual volume of luxury counterfeits sold in 2020*

billion rubles

1. Online polling of consumers of fake and genuine luxury goods

METHODOLOGY

Sample size:

The period of the social media survey:

385 interviews

June 2020

Using its proprietary online platform, BrandMonitor conducted a semantic and visual analysis of posts advertising luxury goods on social media. During the survey, we examined offers of counterfeits in the period from June 2018 to June 2020. A total of 10 million social media posts were analyzed (Odnoklassniki, Instagram, VKontakte, and Telegram) that mentioned 18 luxury brands, of which about 5 million posts contained offers of goods for sale. Of these, we identified 3.5 million posts that were selling fakes.

Several parameters were taken into account to confirm that the goods were fake: the seller openly admitted to it in their post; the post used trigger words typical of ads for counterfeits; the color and/or model of the product does not exist in the brand's genuine range; test purchase was conducted with subsequent examination of the goods by experts.

Sample:

economically active Russian consumers with experiences of buying original or fake apparel or footwear by luxury brands in the past 12 months

Polling period (first wave):

June 2019

Polling period (second wave):

November 2020

2. Analysis of social media

KEY FINDINGS

The monetary value of Russia's online market for luxury counterfeits in 2020

$1 billion

$2.4 billion

The value of illicit goods traded in traditional brick-and-mortar channels in 2020

$61

The average price of a single fake item in 2020

>33%

RELEVANCE

The second wave was defined by a bleak social and economic situation triggered by the COVID-19 pandemic. The Russian statistics authority Rosstat estimates that the country's GPD dropped by 3.1% in 2020 compared to the previous year, while the nation's real disposable income showed a 3.5% decline at the year's end. Over half of respondents (53%) noted a decline in their financial standing, something especially perceived by consumers with a moderate income (interviewees with a monthly income of below USD 348 (RUB 25,000) were more likely to mention the worsening financial circumstances (63%), while those with a monthly salary above the national average or over USD 626 (RUB 45,000) were less likely to dwell on the subject (39%).

SALES CHANNELS: ONLINE AND BRICK-AND-MORTAR

According to FCG, the online segment of the apparel, shoes and accessories market grew in 2020 from 10% to 23%.

The online share of the market for counterfeit luxury apparel, shoes and accessories is traditionally higher at 30%. This is mostly due to the high "visibility" of fake luxury goods for supervisory and controlling agencies: unscrupulous sellers were forced to abandon the traditional brick-and-mortar shops in favor of social media and online stores. Online channels are responsible for about one third of all sales of luxury fakes: no change from 2019.

That the online share remains consistent is explained by redistribution of sales between online channels: social media has gained more popularity in recent years, while online shops are attracting smaller audiences. The fact that sellers are seeking more presence on social media and online marketplaces is confirmed by the data obtained by BrandMonitor during its ongoing Internet monitoring.

Channels used to buy fake luxury goods,

30%

70%

Online

Brick-and-mortar

Of all luxury products advertised on social networks in the past two years, 78% are fakes, but only 11% of sellers dealing in counterfeits would openly admit to the illicit provenance of their goods. From June 2018 to June 2020, a total of 192,000 active social network accounts offered counterfeit luxury items.

While we did not observe any substantial change in the growth rate of the number of posts offering fake luxury goods by individual brands, the number is growing at the same rate as the overall rise in online sales.

More than half of all accounts selling counterfeit luxury goods target a single brand, while 34% of the accounts offer products of 2 to 5 brands. At the same time, fake luxury items are sold to wholesale as well as retail customers. Over 6,250 of existing accounts openly sell wholesale quantities of knockoff luxury products.

MAGNITUDE OF THE PROBLEM

At the end of the first half of 2020, the rate at which new fake-selling postings appeared increased by 15% compared to the same period in 2019. Over 292,000 postings appeared from January to June of 2019 that were openly selling counterfeit luxury items. In the same period of 2020, that number exceeded 333,000. The total number of social network posts published from June 2019 to June 2020 advertising counterfeit luxury products for sale exceeded 625,000.

The publication rate of posts selling fakes dropped by 40% in the period from March to April 2020 compared to February of the same year (from 62,500 to 37,500). However, the rate recovered by June, matching February levels. This may have been caused by the quarantine-related disruptions in supply chains and the closing of showrooms: with new stock nearly impossible to acquire, sales slumped.

>6 000

accounts

Designer:

Anna Ilyina