Counterfeiting and malicious gray-market activity has been a consistent challenge for luxury goods brands. The counterfeit market is now considered the biggest illicit trade in the world — the OECD estimated its worth at $464 billion a year, or 2.5% of world trade, in 2019. It’s clearly a lucrative industry for criminals, and immensely damaging to any luxury brand’s reputation as well as its bottom line.

Defending against counterfeiting ultimately requires the luxury goods sector to evolve its approach to product authentication. But as more fraudulent products continue to hit the market, how can luxury brands protect their intellectual and physical property?

The answer lies in innovative technology with embedded security features, which have the potential to revolutionize product verification and digital tracking. Near field communication (NFC) and blockchain technology underpin these solutions, becoming essential tools for strong brand protection and product authentication.

Blockchain is often linked with cryptocurrencies, but this immutable and decentralized database is also key to achieving clear product traceability and authentication. When paired with NFC chips, which enable communications between electronic devices over short distances, it can deliver extremely effective security for physical products. 

How It Works 

Luxury brands can embed an ultra-thin NFC chip within their product. This gives customers the ability to authenticate the product with a simple tap of their phone. When integrated into a bag, jacket, watch or piece of art, the chip not only guarantees product authentication, but offers customers insight into the item’s lifecycle and wider supply chain visibility as well.

Accessibility and simplicity are essential if luxury retailers and their customers are to engage with this technology. Solutions need to be turnkey, ready to go straight out of the box. At the same time, they must be non-intrusive, to protect the customer’s experience when using the product. Small and lightweight NFC chips make this possible. Just 0.5mm thick, these durable, waterproof, temperature-resistant chips are easy to hide. This allows for seamless and versatile implementation with products across luxury goods industries, especially for high-end fashion such as clothing, footwear and handbags. 

The blockchain-based infrastructure behind these sophisticated NFC chips provides a transparent data audit trail. With an unalterable record of transactions available to view and secure data storage, customers have full visibility over each stage of a product’s journey and a guarantee of authenticity.

State-of-the-Art Protection

Data is only as good as the security infrastructure that underpins it. As the tools used within the gray market to create counterfeit products become more sophisticated, luxury brands must keep in step, by utilizing the most secure techniques and tools available to secure their goods.

The latest NFC tags adopt the security and privacy features needed to make this possible. For example, tags with advanced elliptical curve cryptography allow brands to achieve a higher level of protection against physical attacks, and ensure product integrity.

Connecting With People

Embedding semiconductor technology into luxury items will set a new standard for verification and digital tracking. At the same time, it can help brands to deepen their connection with people. Once a customer has tapped the NFC tag with their smartphone and connected to the product’s digital certificate, the brand has more opportunities to engage with them.

Whether it’s offering personalized marketing content or using the interactive platform for broader engagement, brands can provide dynamic and diverse digital experiences. With a smartphone, customers can be closer than ever to their favorite luxury brands.

Given the growing interest in sustainability, brands can also use NFC chips to highlight exactly where materials were sourced, how products were made, and how they can be reappraised or recycled. This has quickly become a significant purchasing decision for consumers. Research from PWC indicates that people are willing to pay a premium and forgo cheaper alternatives when factoring in sustainable practices.

Luxury brands can take action against the persistent threat of counterfeiters. While the tools available to bypass authenticity and verification controls are becoming more sophisticated, the latest NFC chip technology bolsters security so that brands are in the strongest possible position to protect their intellectual property, and prevent their customers falling for counterfeit goods.

By deploying blockchain architecture combined with cutting-edge secure NFC technology, luxury brands have an opportunity to guarantee product authenticity, protect their reputation, and create new routes to deepen customer engagement.

Romain Pardo is head of NFC/RFID product marketing with STMicroelectronics.