Here in 21st century Africa, the elite no longer relish the almost exclusive access to brands that the likes of Hutton enjoyed in the roaring 20s. Anyone can buy luxury goods. The only real differentiator is whether they can afford the real thing, or even deem it necessary, thanks to the explosion of counterfeit luxury goods which have put the veneer of luxury within everyone’s grasp.
While I was studying towards my MBA, I had the privilege of being taught by Mark Ritson, a renowned British marketing professor, all-round guru, columnist and branding expert. At the time he was LVMH’s brand consultant, so he had quite a bit of inside info, and he believed that the whole debate around counterfeiting being bad for brands was overstated.
It wasn’t just behind closed doors that Ritson held views that challenged the notion that counterfeit products are a threat to luxury brands. As he wrote for Branding Strategy Insider back in 2007: “The first flawed assumption is that a consumer who buys a fake would have otherwise purchased the genuine article – this is hogwash. A woman does not buy a Hermès Birkin bag for £10 000 because she needs a handbag. She wants the brand and for all the utilitarian verisimilitude of a £200 copy from Shanghai, this is something even the best fakes cannot offer. It’s true that millions of fake luxury handbags are sold each year. But very few of them, if any, cannibalise the sales of the real thing.”
Is this indeed the case? Certainly, the luxury brands industry has been forceful in its condemnation of the practice, with the likes of Alexander Wang fashion brand recently suing 459 websites for selling counterfeits. They won a US$90 million judgement.
By all means, as Ritson stresses, deal with the illegality but brands should rather be concerned if fakers stop making counterfeits of their brand. Why? Because if a brand is so exclusive that only the rich and ultra-rich know about it and use it, then how do you build a perception of that brand among the masses? How do you differentiate it for its exclusivity?
Real versus fake
Anecdotal evidence is one thing, but recently a GIBS MBA student of mine, Natasha Shunmugam, delved into the issue of real versus fake brands for her research project. Her findings are revealing in terms of how South Africans relate to luxury brands across various social strata and, more critically, her work tells us that buyers of counterfeits are unlikely to migrate towards buying the real thing, while brand-buyers now are likely to remain so in the future.
Natasha’s was an interesting topic for a wide variety of reasons, not least of which is the tendency of the millennial generation (those born between 1980 and 2000) to favour brands on the one hand, while valuing sustainability on the other. While Natasha didn’t focus specifically on Millennials, her survey of 138 individuals of varying ages, races, classes and genders (with a 68% female skew) in Gauteng province, did include a number of Millennials (9% of respondents) and borderline Millennials (25%); so we can assume that many of her findings are applicable more directly to this exciting new generation and, therefore, to future buying habits.
Her research also showed how pervasive the issue of counterfeiting luxury brands was in South Africa – and, indeed, Africa. This is far more prevalent than in regions like Europe and North America, where people are much more likely to be able to afford the real thing. In South Africa the majority of people are highly unlikely to afford luxury brands and yet we are a society which is extremely aware of luxury brands. This combination gives counterfeits a bigger chance of grabbing people’s attention.
Natasha’s research was wide-ranging in its focus, but several important observations must be noted, specifically around buying behavioural patterns and why South Africans are motivated to buy originals.
Welcome to the club
When it comes to behaviour, she found that if those surveyed had bought counterfeits in the past, then they were likely to do so again. And similarly with originals; if you’ve bought original in the past then you are more likely to do so again. I think there is more to it than just behaviour: often individuals make decisions to buy counterfeit due to economic reasons – they simply can’t afford the real thing – and if you cannot move up the social ladder economically then you are likely to stick to this behaviour. It is also highly likely that those buying counterfeit may never be able to buy the original and certainly, those buyers of originals would put up their noses at fakes. So this divides people neatly into the fake versus real camps.
Where it gets interesting is how aspiration comes into play when South Africans make those first decisions about whether or not to support counterfeits or go original. And this has a lot to do with attitudes, both towards the products and around social perceptions.
If you are a fan of brands, and a believer in the brand promise of quality, and if you are in the camp that fully believes that the characteristics of the brand can be transferred to the wearer by virtue of ownership, then buying counterfeits – no matter how good or affordable the fake – would invariably be a ‘no no’. For this individual it is not about the ‘stuff’, but rather about what having the brand says about them.
Natasha’s research shows that self-image is certainly positively associated with the intention to buy originals. There is a decided ego element at play here, which points to the cheapening of one’s personal brand by buying fakes. Status consciousness and self-image were shown to be positively associated with buying an original because the owner knows it is real. Conversely, individuals who are not that status-conscious don’t know and don’t really care if a product is fake.
The upwardly mobile dilemma
It is important to remember that, for those who do buy originals, belonging to the luxury buyers ‘club’ is of huge importance psychologically; it speaks to their place in society. This ‘club’ is alluring to many aspirant South Africans, and is a point to watch since those who are determined to work their way up the ranks may be deterred from buying fakes lest they are ‘found out’ when they eventually become part of the coveted ‘club’.
In other words, if you think you are heading upwards socially, does this positively dispose you towards buying originals? There is certainly enough evidence to suggest that this is true. For aspirational South Africans, buying fakes would, I think, keep them in their ‘middle class’. So they would rather buy the originals now and aspire to something grander.
And, once you’ve aligned yourself with the originals camp, then research indicates that you don’t go back. For one thing, it destroys or reduces the value of your original. And, secondly, for the brand conscious, diluting a brand would be a cardinal sin. You can’t discount a Ferrari would be their credo. It’s just plain wrong.
Watch this space…
For luxury brands, faced with a global slowdown post the 2008 credit crunch, this move into the originals camp can’t happen soon enough, particularly given the saturated nature of the traditional markets in Europe, the United States and Asia. But Africa hasn’t quite been playing ball, despite upbeat projections from the likes of research firm Bain & Co which said in a 2016 report that “Africa has the potential to be the breakout start in the coming years”. For the record, Bain predicts the luxury goods market will record growth of 2%-3% until 2020, hitting about €280-295 billion in revenue.
As South Africa’s demographics and wealth profile shift, so too – believe research companies and luxury brand manufacturers – will the consumption patterns of Africa’s emerging and aspirant black market. But, they – in step with government – have been disappointed by the speed at which this transformation is taking place, and the recent downgrading of South African credit by Standard & Poor’s and Fitch rating agencies will do little to drive the economic growth needed to chivvy yet more South Africans into wealth.
Until we get that right, there may well be a lull in the uptake of luxury purchases by aspirant South Africans, but, interestingly, this won’t be a blanket effect. Natasha’s research makes a relevant point about which types of counterfeits are more ‘acceptable’ and supported than others. For example, she found there is more chance of Gautengers buying fake clothes and handbags than, say, sunglasses. Of course, sunglasses are more affordable and might set you back in the region of R2 000 to R3 000; so it is possible to save up for those items. But a Louis Vuitton handbag is, at a minimum, R40 000, putting it firmly out of the grasp of many.
This behaviour again highlights that if the cost of an original luxury item is so far out of an individual’s reality, they won’t even try. The slightly more reachable nature of sunglasses gives those who are aspirational the chance to get into the exclusive luxury ‘club’ by saving or extending themselves financially. This is particularly true in South Africa and indicates that, at least for some time, we are likely to see a dual approach to luxury consumption, not unlike the two faces of our economy, with counterfeits representing the second economy and brands, the advanced First World.
Natasha’s research tells us just over half of her respondents saw themselves in the upper classes in the near future. This should be catnip to luxury brands. As these South Africans move up the economic ranks so too will luxury buying boom. We have already had a taste of the power of aspiration and its bedfellow ‘conspicuous consumption’ in South Africa, and we’ve seen how it has transformed the face of Sandton City and Hyde Park into brand Meccas. This gloss feeds the appeal of brands, ably supported by the approval of colleagues, friends and family alike. This sells the desire for original brands and it is that desire that will fuel luxury buying in the future.
But, until then, motorists can continue to pick up ‘Gucci' sunglasses, ‘Chanel’ perfume and ‘Louis Vuitton’ handbags at any intersection around the City of Gold. Often for a very good price!