Consumers have an increased appetitie for luxury goods this Christmas, according to the Christmas Retail Survey from business advisory firm Deloitte.  17% of consumers expect to spend more on luxury items this year than they did in 2006.  But those tempted by fake goods abroad whilst Christmas shopping should be cautious. Consumers found with counterfeit goods on their return home from foreign trips could face tough penalties.

Retailers are also likely to feel the pinch as a result of the demand for luxury with the UK market for counterfeit goods expected to  reach £14billion this year, up 10% on 2006*.

According to the Deloitte Christmas research 19% of consumers surveyed intend to buy a designer handbag or shoes as a gift for friends and family this year. A further 19% also have designer items on their Christmas wish list and 31% of these are women aged 16-31.  66% of people expect to buy clothes as a gift for someone this year, whilst 53% are planning to purchase jewellery.

Neil Hargreaves, counterfeit specialist at Deloitte said: “Those travelling to Europe, the home of the major luxury brands, in the run up to Christmas may be tempted to buy fake goods. Buying handbags, jewellery and watches as gifts can be an easy option as size is not an issue. Also these items can be worn on many occasions and some will see them as a worthwhile investment. 

“But counterfeiting is taken seriously. In France for example, travellers are reminded that the purchase or possession of counterfeit goods is punishable by a fine of up to €300,000, about £200,000 although in practice the fine is often around double the value of the ‘genuine article’. In Italy, the situation is much the same with fines for purchasing a single counterfeit item reaching as much as €10,000, or about £7,000.”

Most fake goods are manufactured in the Far East, and South America. Market stalls and auction sites are a major source of fakes. The most popular counterfeit goods are clothing, followed by shoes, watches and leather goods and jewellery.

Kristian Park, counterfeit specialist at Deloitte, said:  “Many consumers are not aware of what happens when they hand over money for fake goods or the implications. Counterfeiting is often run by highly organised criminals. Selling counterfeit goods can be a highly profitable crime and a low-risk way of raising funds for more serious criminal activity. In the UK alone it costs the economy in the region of 4,000 jobs a year*.

“Most luxury brands have extensive anti-counterfeiting programmes in place and use private investigators, lawyers and accountants to work with local authorities and custom agents to combat the manufacture, sale and export of fake products.”

The global luxury market looks set to continue its recent strong growth but serious challenges remain around how brands can become more assertive in protecting their reputations and profit margins from counterfeiting.

Hargreaves added: “To maximise growth many luxury brands have established franchise and licensing networks to expand quickly into new markets.  Markets such as India and Russia present huge opportunities for high end brands. However caution should be exercised, make this move unwisely and it can be detrimental to the positioning of the brand through the lost control of both product and distribution beyond domestic markets.”

“Luxury brands can take steps to preserve integrity and combat sale and distribution of counterfeit goods. Attention must be paid across an organisation’s weak spots. Licensing and distribution agreements must be water tight and security gaps in the supply chain need to be plugged and regular checks carried out across the distribution networks around the world.”

To tackle this crime brand owners, trading standards, law enforcement and other agencies must adopt an organised approach to fight back against those who are defrauding consumers and rights owners.

Ends

*A report by law firm Davenport Lyons published in 2007
*According to the Anti-Counterfeiting Group

About this survey 
The survey findings were based on consumer data obtained by market research undertaken by TNS on behalf of Deloitte. Over 1000 adults aged 16+ were interviewed on 31 August 2007 - 2 September 2007. The respondents were selected according to a quota sample designed to be representative of all UK adults. Replies were also received from questionnaires sent out to over 350 of the United Kingdom’s retailers.  The retailers were from a cross-section of the industry.

About Deloitte
In this press release references to Deloitte are references to Deloitte & Touche LLP, which is among the country's leading professional services firms.  Deloitte & Touche LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu ("DTT"), a Swiss Verein whose member firms are separate and independent legal entities.  Neither DTT nor any of its member firms has any liability for each other's acts or omissions.  Services are provided by member firms or their subsidiaries and not by DTT.  Deloitte & Touche LLP is authorised and regulated by the Financial Services Authority.