SUPPLY CHAIN 23
Counterfeiters and COVID-19: Protecting the supply chain
n Rachel Jones - SnapDragon Monitoring, UK
The COVID-19 pandemic has impacted every corner of the retail industry this year, and beauty and cosmetics have been no exception. Global lockdowns, and the forced exodus of the high street, left brands unable to establish an over-the-counter connection with their consumers for months. At the same time, all businesses have
been challenged to adapt to the changing habits of cooped up customers. Nevertheless, as retail doors closed, windows opened, and sales of some online personal care and beauty brands have soared. Evaluating the average upswing in beauty e-commerce since the start of the pandemic, McKinsey have estimated typical growth to be between 20 and 30 percent. For an industry facing numerous challenges, from ongoing restrictions to uncertainties about consumer behaviour, a boost in online shopping is an important lifeline. However, COVID-19 physical distancing
and travel restrictions have also left the industry’s supply chains vulnerable. Both ingredients and packaging are often – but obviously not always - sourced from China and South East Asia, meaning the ability of procurement departments to source their products, and of distributors to deliver them securely, has been under strain from the very beginning of the pandemic. As lawful industry has faced unprecedented challenges, counterfeiters have been handed ample opportunities, gifted both a global trade network influx and a surge in inexperienced online shoppers. Personal care and hygiene products have
been counted amongst the worst hit by fraudsters. This is unsurprising, considering the sudden demand for soap and hand sanitisers. Indeed, in June, London Trading Standards reported that they had seized 8,000 counterfeit hand sanitisers at Heathrow Airport since the pandemic began. Yet, even non-essential items have been targets for counterfeiters, for whom any surge in online shopping is an opportunity. Fake cosmetics were among the $3.1 million of counterfeit goods seized by a recent operation coordinated by INTERPOL and Europol.
November 2020
The changing face of beauty The shifts in consumer preferences accelerated by the pandemic further complicate brands’ efforts to manage demand and, in turn, monitor supplies. Sales of traditional makeup products have broadly fallen, as homebound workers shirk heavier products in favour of an au naturel Zoom look. However, other self-care items have seen an increase, as mentioned. Research by Mintel has shown that 30 percent of skin care users have used more moisturiser since the start of lockdown, and 1 in 7 have used more facial treatments such as face masks. Indeed, with cloth masks covering the
lower half of our faces, the famous ‘lipstick effect’ – which sees sales of small luxuries rise during economic downturns - is perhaps becoming the ‘skin care effect’, with at-home face mask treatments emerging as the ideal remedy for the fear of breakouts. Zalando, an online marketplace based in Europe, has cited a significant surge in popularity for self-care beauty products including skin care and nail care. Sudden changes in demand and swells in popular search terms create an open field for counterfeiters to occupy. If
brands do not take steps to protect their customers from newly popularised fake products, they risk losing hard-earned trust. Without a proactive brand protection strategy, brands may find that counterfeits available online pose a risk to their reputation and, crucially, their customers’ health.
What are the risks of counterfeit cosmetics? Counterfeit cosmetics are not new. Unfortunately, the industry has long been plagued by the proliferation of fake makeup, skin care and personal hygiene products - produced without rigorous safety measures and quality control - masquerading as trusted brands. In 2018, almost $1 million worth of cosmetics were seized by authorities in Los Angeles, bearing the names of well-known brands. The direct-to-consumer business model which harnesses the power of social media as a powerful sales tool is very effective at building a digital following for a beauty brand, but is equally effective as a charade behind which counterfeiters run their operations and trick consumers. Besides the damage than can be done
PERSONAL CARE EUROPE
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