Developing a tool to measure the level of transparency of luxury brands and their impact on the environment and their ecosystem is the challenge two women from the academic and corporate worlds have set for themselves under the banner of Enterprise for Society: Prof. Felicitas Morhart from HEC Lausanne (UNIL) and Margot Stuart from the company OriginAll, in partnership with the IMD business school.
Following the announcement in February by E4S, OriginAll and the Swiss Center for Luxury Research at HEC Lausanne on the development of a new index, we wanted to find out more about the project – the first of its kind worldwide!
We were interested in the role of new technologies in the luxury goods sector, and their potential to combat the market in fake products. Leading players in the luxury goods sector are now redoubling their efforts to deal with the scourge of counterfeiting, which not only impacts their business but has dramatic consequences on sustainability, in terms of labour exploitation, child labour, and the use of polluting materials and manufacturing processes.
Read our interview with the people behind the project, which is supported by Enterprise for Society. On the academic side are HEC Lausanne (UNIL) professor and researcher, Felicitas Morhart, an expert in the luxury goods sector and founder of the Swiss Center for Luxury Research, and Professor Stéphane JG Girod, an expert in luxury goods at IMD. On the entrepreneurial and technological side is Margot Stuart, co-founder and COO of OriginAll, a Swiss company specialising in technologies and platforms aimed at combating the market in fake goods.
1. What does the planned index involve and what is its aim?
[Felicitas Morhart]: Traceability and security technologies play a central role for brands that want to make a commitment to sustainability and social responsibility. They offer more transparency in the production chain and help to identify the origin of the products and materials used, both internally and externally. The aim of the new index will be to monitor changes in the use of these technologies by the key players in the luxury goods industry, and therefore be able to measure how transparent they are with their clients.
2. How do these technologies impact the market in fake goods?
[Margot Stuart]: They are important in combating the market in fake goods, which do not comply with any safety standards and can put their owners in danger. The lack of traceability and the long reach of the internet create a risk for luxury brands, which can be held liable if the public directly associates defective counterfeit goods with them. There are high risks, for example, with using counterfeit sunglasses, since they cannot provide the wearer with adequate protection. The same is true for perfumes or clothes, which are in direct contact with the skin, and may contain hazardous substances.
3. What cost does the fake goods market represent to the global economy?
[Margot Stuart]: According to the ICC (International Chamber of Commerce), counterfeiting and piracy will represent a cost to the world economy estimated at over USD 4.2 billion by the end of 2022. It is a colossal source of funding for criminal and terrorist organisations and a major catalyst for corruption. Counterfeits in the luxury goods sector represent over 60% to 70% of the fake goods market [source]. And the figure could continue to increase as, over time, the market for second-hand luxury items outstrips the luxury goods industry itself, offering new opportunities for counterfeiters.
4. What answers does the project offer for consumers of luxury goods?
[Felicitas Morhart]: It helps consumers learn more about the relationship between the fake goods market, illegal trafficking and sustainability, and therefore makes them more aware of the various aspects involved. It also gives them the option of making informed purchases, in a way that reflects their own conscience.
[Stéphane JG Girod] Although our aim is, of course, to help brands reduce counterfeiting and as a result, the organised crime that underpins it, we mustn’t forget that the majority of purchases of counterfeit goods are made by customers who want to buy a fake, particularly given the explosion in the prices of luxury items in recent years. Ensuring transparency and ethics in the value chain is therefore an even more important goal. It’s also an opportunity to try out the new circular models for a sustainable economy.
5. What does the research element of the project involve?
[Felicitas Morhart]: It will be a two-stage project.
There is currently very little data about the luxury goods industry. Together with OriginAll, the researchers at HEC Lausanne and Prof. Stéphane JG Girod, a researcher at IMD, will collect and analyse data from the luxury brands taking part in the study, to create an index. In tangible terms, there will be a joint platform where the various brands can indicate which traceability and security solutions they use, and provide feedback on their experiences. The platform will be a neutral space, the aim being to share experiences and demonstrate that there are multiple solutions available for people who want to act sustainably, and drive a call to action in favour of sustainability. This will be the starting point; the next stage of the plan is to develop Key Performance Indicators (KPIs) in order to build an index.
In terms of teaching, the planned index will be one of the live projects on which students on the new E4S Master’s programme in technology and sustainable management can work during their course.
“By providing an academic dimension to the project, HEC Lausanne, along with its partners and in the context of E4S, is contributing to creating a neutral and objective solution for the challenges of the luxury market,” comments Prof. Felicitas Morhart. “We invite all brands in the luxury goods industry to work with us on the development of the new index, by contacting us at firstname.lastname@example.org,” adds Margot Stuart, OriginAll.
More infomration on E4S website.