ALLIANCE AGAINST IP THEFT

Consumer Survey
Clothing & Footwear Sector
commissioned from
independent survey
specialists

ALLIANCE AGAINST IP THEFT

Consumer Survey
Clothing & Footwear Sector

commissioned from independent survey specialists

www.allianceagainstiptheft.co.uk
 ALLIANCE AGAINST IP THEFT
Consumer Survey
Clothing & Footwear Sector
commissioned from independent survey specialists

INTRODUCTION

Intellectual property is defined in the IP Crime Report 20071 as the legal rights owned by
individuals and organisations in inventions, designs, goods and other creations, produced by
intellectual activity in the industrial, scientific and artistic fields. These rights are intended to
protect the creators and ensure that they will benefit from their originality and effort.
Just like physical property, intellectual property (IP) can be stolen.
IP crime is committed when products are copied and/or marketed for
profit without the consent of the rights holder. This is a double-edged
crime, as it also defrauds and threatens the consumer.
There are two different categories of IP crime: counterfeiting, which
involves branded goods (protected by trade mark laws) such as clothing
and footwear and pharmaceuticals, and copyright theft, which involves
other industries such as music, film, books, computer games and
software (protected by copyright laws). The two kinds of protection can
often overlap, with both trade marks and copyrights involved in a given
product e.g. software.

FIGHTING IP CRIME MATTERS BECAUSE:

■ it causes economic, social and physical harm to individuals and local communities,
nationally and globally
■ it is a low-risk 'soft' crime, linked to some very nasty activities
■ the huge profits from IP crime are used to fund other serious organised crimes such as
people smuggling, drugs, guns and child pornography.
The Alliance Against IP Theft is a unique coalition of associations representing rights owners
in all industry sectors affected by product counterfeiting and piracy, ranging from branded
goods, music and video to books, computer games and software. The Alliance has been
campaigning for greater recognition of the value of IP, and for better
enforcement of IP rights, since it was formed in 1998.
Now IP crime is increasingly being recognised by government and
law enforcement as a major threat, both in the UK and globally.
Attempts are regularly made by industry, government, the intelligence
services and law enforcement to measure the full impact of IP
crime, and the threats it poses to the economy, to consumer
safety, and to local communities.
It is important to reach common ground on this, because the
results will determine the priority given to IP crime in the national
enforcement agenda. Several different government departments
have responsibility for different aspects of IP crime, and consistency
of information and policy is crucial.
Various estimates have been made in the UK of industry losses, criminal gain and loss to the
Exchequer e.g. through unpaid VAT. Job losses undoubtedly result from the harm to legitimate
manufacturers and retailers, but this is also difficult to estimate accurately.
One of the most robust and consistent ways to measure the harm caused by the trade in fakes
is via properly conducted consumer surveys.

_________________________________
1
Available from the UK Intellectual Property Office website www.ipo.gov.uk/ipcreport.pdf 1
 As yet there is no standard methodology for sizing
the problem or assessing consumer psychology, and
there still seems to be an unquenchable consumer desire
for a bargain. However, those fake trainers you've bought
for your kids in the local market may be funding the
supply of drugs at their school gates, and such a 'bargain'
may end up costing a great deal.
Demand is the ultimate driver in counterfeiting, and
IP crime can be wiped out if its consumer market
disappears. In order to get the right messages across, it is crucial to understand consumer
spending patterns, socio-economic and geographical variations and attitudes to IP crime.
The Internet now offers a particular challenge. Impossible to regulate and police effectively, its
auction sites and traders offer con-sumers endless choice, and a huge market in fakes,
sight unseen. In effect, the Internet has created a vast new superstore for the con-sumer to
browse at will, in the comfort of their home, at any time
they choose.
It offers retailers and brands an ever-expanding market
for their goods. Unfortunately, criminals also love the
Internet, for its speed, reach and anonymity and the scale
of their activities is equally impossible to estimate.
This independent survey of the clothing and footwear
sector in the UK was carried out in February 2007 by
Ledbury Research, selected for its experience in this
sector, which had delivered a well-received survey of consumer attitudes to fake luxury goods
the previous year, commissioned by solicitors Davenport Lyons.2
Respondents were invited via e-mail to respond to an online questionnaire. A representative
sample by gender, age and income of just over 1000 aged 16+ delivered a healthy 93%
completion rate.
The clothing and footwear sector was chosen because it is one of the most vulnerable to
attack from counterfeiting in the UK. It includes sportswear and some luxury goods, together
with mostly casual styles, which are now more popular than formal-wear.
The makers and sellers of genuine products often can't compete with the criminals, who
don't need to fund any research and development, comply with safety regulations or
meet the cost of permanent premises, taxes or proper wages.
While there is some UK production of counterfeit clothing
and footwear, most fakes now originate in the Far
East, following legitimate industry's move there some
years ago. Container-loads of fake sportswear, T-shirts,
shoes, trainers and casual outerwear bearing famous
trade marks are regularly seized by UK Customs at
our ports. EU Customs as a whole seized 250 million
items at the borders in 2006, including over 30 million
pieces of clothing and footwear. 80% of all items seized
originated in China.3
We hope that this report will help to inform all stakeholders and contribute to the creation of a
national enforcement strategy in the fight against IP crime.
For further information about the Alliance, its members and activities visit:
www.allianceagainstiptheft.co.uk

Lavinia Carey, Alliance Chair

February 2007
_________________________________
2
Counterfeiting Luxury: Exposing the Myths June 2006 and 2007 Available to download from the Anti-Counterfeiting Group
website: www.a-cg.org (in Guest Area, Publications/Reports) by kind permission of Davenport Lyons
3
EU Customs statistics 2006 available from the Europa website 2
 ALLIANCE AGAINST IP THEFT
Consumer Survey
Clothing & Footwear Sector
commissioned from independent survey specialists

HEADLINES
■ Research methodology: online survey via e-mail invitation
■ Fieldwork dates: January 2007
■ A representative sample on age, gender and income of 1023 UK adults aged 16+
■ 93% completion rate; 92% said it was easy to answer

Total UK spend on fake clothing & footwear per annum = £3.009million

this is the criminal gain i.e. the profits made by counterfeiters in this sector alone
(cost to the Exchequer around £800m in lost tax revenues)
Cost to UK Industry per annum = £3.482million
this is the loss to legitimate industry and retailers in this sector alone
(i.e. what consumers would have spent on genuine items, if fakes not available)

The research shows that:

■ One in four of the UK population have knowingly bought fake clothing or footwear in the past
year (44% in the past three years)
■ Although fake clothing & footwear are largely made overseas, three-fifths of the respondents
had bought the majority of their fake goods in the UK
■ Markets, such as car boot sales, remain the most prevalent source of fake goods (two-thirds
of the respondents who had purchased fake goods did so from market stalls)
■ Legitimate shops are under threat. Over a third of the respondents would have bought a
genuine alternative if the fake had not been available
The Internet is also a growing source of counterfeits: over a third of respondents who buy
fakes do so via online auction sites where criminals have free rein.
In addition, the research shows that nearly one-third of all buyers of fakes have, or might have,
unknowingly bought a fake, which has been factored into the figures below - calculations are
available if required. (This is particularly likely when goods are bought online without to the
opportunity to view them in advance. )
The details: ■ 44% of UK consumers have bought fake clothing/footwear at some point
■ 15% have in the past year
■ 29% have in the past 3 years

Base: all respondents (n=1023) 3

Fake buyers are no different from the population as a whole
■ 56% of non-fake buyers earn less than £30,000 vs. 49% of fake buyers
■ No gender difference
■ T-shirts are the biggest fake category

Base: respondents who’ve bought fake in past 3 years (n=292)

■ 899 fake t-shirts were bought by the respondents in the past 3 years
■ Across the country as a whole, this represents 43.1m t-shirts over 3 years
■ Or 14.4m a year

Base: respondents who’ve bought fake in past 3 years (n=292)

■ 45% wouldn’t have bought anything had the fake been unavailable
■ 39% would have bought a genuine alternative (this represents the loss to industry/
retailers)
■ Those who have bought a genuine item from a given brand in the past are more likely to buy
that brand as the alternative, if the fake is unavailable
4
 Base: respondents who’ve bought fake in past 3 years (n=292)

■ Over a third don’t buy any fakes abroad, 61% buy majority of fakes in UK

Base: respondents who’ve ever bought fake (n=494)

■ Most fake buying in this sector is done through market stalls

5
 Base:
Base: respondents who’ve respondents
bought who’ve
at least bought
one fake fakeeach
from in past 3 years (n=270)
channel (n=292)

■ Nearly one third have or might have unknowingly bought a fake (this is factored into the
figures in the Appendix)

Sportswear, fragrance and watches are the other most-bought fakes

6
Consumer Attitudes:

Divided opinion over the harm caused by buying fakes, whether they provide value for
money, and whether they provide third world jobs

Base: respondents who’ve bought fake in past 3 years (n=292)

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 ALLIANCE AGAINST IP THEFT
Consumer Survey
Clothing & Footwear Sector
commissioned from independent survey specialists

APPENDIX

Total UK spend on fakes per annum £3.009m

cost to the Exchequer around £800m in lost tax revenues
Cost to UK industry per annum £3.482m
i.e. what consumers would have spent on genuine items, if fakes not available

The Numbers:

Prompted total spend on fake clothing and footwear per year (annual) £744m (A)
(Estimated value of genuine equivalents £4,739m) (B)
(Estimated ‘saving’ through buying fakes £3,995m) (C)

The above is based on asking respondents who have bought at least one item of fake clothing
or footwear in the past 12 months, how much they estimate they have spent, and how much
they estimate the genuine items would have cost.
These two numbers are then multiplied up to be representative of the 49.0m people in the UK
aged 16 or over (A and B respectively).
The difference between A and B is the total amount that these fake buyers believe they are
saving, by not buying the genuine items (C).

Prompted total spend on fake clothing and footwear per year

(last item - person) £1,245m (D)

Frequently respondents find it difficult to estimate a per year spend, so A was cross-checked
by asking each fake buyer what the last item they bought was. Given this was asked to a large
group of people, these last items will be representative of buying activity at any point in time.
For each respondent, the price of the last fake bought was then multiplied by the number of
fakes they had bought in the last year, giving a total spend per person per year. This spend is
then aggregated up to a UK level (D) to be representative of the 49.0m consumers.

Prompted total spend on fake clothing and footwear per year

(last item - item) £1,220m (E)

To ensure D is congruous, it was cross-checked by looking at the average spend on a per

item basis, rather than per person basis. That is to say, based on the last item spend it was
possible to work out all of those who bought a fake t-shirt, what their total spend on fake
t-shirts was in the year, then repeat this for each fake item of the 11 clothing and footwear
categories.
Aggregating this up produces E; this is within 2% of D and thus provides additional certainty on
the calculations.

Implied spend per year Total pp % fakes % fakes % fakes Unaware spend
(prompted) (total) (unaware)
Market Stalls £53 23% 30% 7% £183m
Online Auction £115 4% 20% 16% £901m
Discount Stores £56 3% 5% 1% £ 55m
Outlets £319 1% 5% 4% £626m
Total £1,765m (F)
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Calculations for spend on fakes has so far been based on buyers knowing that they were
buying a fake (A, D and E). However, when asked only 69% of the population were certain
that they had never knowingly bought a fake. 19% bought what they thought was a genuine
item, only to find out later it was fake, and a further 12% were unsure if this had happened to
them or not.
Clearly, there is an element of Unaware Spend.
To estimate this, spend on fakes and genuine products was examined on a per channel basis.
For example, based on questions to all the respondents it is known that the average spend per
person on genuine and fake clothing and footwear was £53 in market stalls.
The amount spent on fakes per channel was then calculated based on answers from
respondents; the total amount spent on fake clothing and footwear is £12 or 23% of £53 for
market stalls. This 23% represents the fake spend that the buyer is aware of.
The total proportion of fakes bought per channel was then estimated, based on industry
experience, other studies and seizures. For Market Stalls this was estimated at 30%, meaning
that 7% of fake purchases must be bought unaware. 7% of £53 is £4 on a per person basis, or
£183m on a nationwide basis. This was carried out for each channel, summing to the total
unaware spend (F).

TOTAL UK SPEND ON FAKES Aware £1,245m (D)

Unaware £1,764m (F)
£3,009m

The total spend on fake clothing and footwear by UK consumers is therefore the sum of the
spend that they are aware of (D), and that which they are unaware of (F)
To work out the loss to industry, respondents were asked about the last fake clothing or foot-
wear item they bought. They were asked what they would have done, had the fake not been
available. Those who said they would have bought a genuine item (either from that brand/
retailer or another), were then asked what they would have spent on this genuine alternative.
This was then aggregated to (G).

LOSS TO THE SECTOR What they would have spent on genuine items £1,718m (G)
Unaware spend on fakes £1,764m (F)
£3,482m

G is not the only loss to the sector though, as there are those who are unaware that they
have bought a fake. These respondents sought the original item in the first place, not a fake
equivalent, and we can assume that they would have bought a genuine item (either from that
brand/retailer or another) if they had known it was a fake.

Therefore the unaware fake purchases (F) also represent additional lost sales to the sector.

9
 ALLIANCE AGAINST IP THEFT
Consumer Survey
Clothing & Footwear Sector
commissioned from independent survey specialists

NOTES

10
 ALLIANCE AGAINST IP THEFT
Consumer Survey
Clothing & Footwear Sector
commissioned from
independent survey
specialists

ALLIANCE AGAINST IP THEFT

Consumer Survey
Clothing & Footwear Sector

commissioned from independent survey specialists

www.allianceagainstiptheft.co.uk