Cape Union Mart’s iconic K-Way brand impacted by counterfeit products
· The South African
Recently, Mike Elliot, CEO of the Cape Union Mart Group, shared his grievances about counterfeiters flooding the market with fake K-Way jackets.
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Elliot described how local manufacturing was “very important” to the Cape Union Mart brand.
He also suggested that the government could do more to stem the tide of fake product inflows.
Counterfeit products impact local production
During an interview on Hot Business with Jeremy Maggs, Elliot highlighted the retailer’s commitment to local production and desire to see it grow. He mentioned the group had two large local production facilities.
The group’s Cape Town factory, where the K-Way puffer and soft-shell jacket were the core products, employs 400 people.
A 15 Year Problem Escalated by Artificial Intelligence, Affordability, and Criminality
Elliot explained that counterfeit products had “been a problem for many years.” The issue had been around for over 15 years, becoming prevalent enough that it necessitated the company keep a counterfeit unit on retainer.
But he added that in the last two to three years, since the introduction of online marketplaces, the issue had escalated.
These marketplaces were responsible for the growth of counterfeit products because they formalised a previously informal trade.
Artificial Intelligence
“At the same time, we’ve seen the prevalence of AI tools that are… very quickly… scraping our websites and creating false websites.”
However, he explained the group had plenty of success eliminating counterfeit websites.
“We’ve been able to introduce our own tools and solutions in terms of preempting and finding registration of sites so that we can take them down as they come up.”
Affordability
Elliot explained that “in many instances, customers are buying these almost knowingly.”
The lower price point of counterfeits meant consumers under tremendous pressure could still acquire an aspirational product.
In response to these pressures, Cape Union Mart had maintained its commitment to “building a quality product that lasts,” but had also “worked really hard at trying to build access into the brand at sharper price points.”
He explained how the entry price point for a K-Way puffer had climbed to R1 200, but that during the last season, the company introduced a jacket at R999.
“It still retains the quality that we believe the brand carries. But it really is a response to try and allow customers an access point into the brand that is more affordable.”
Criminality
When asked how much of the counterfeit market was born out of criminality and how much by affordability, Elliot shared his view that if “criminals couldn’t get away with what they were doing,” the problem wouldn’t persist.
He emphasised that affordability created the market, while it is the “criminal element that facilitates it.”
Government Intervention Needed to Stem the Inflows of Counterfeit Products
Elliot shared the retailer’s hope that the South African Revenue Service (SARS) and “the border authorities can do more in terms of plugging the inflow of counterfeit goods.”
Yet he acknowledged that stemming the tide could be challenging because sometimes counterfeiters ship in blanks and add the logos and labels locally.
He concluded that the retailer always believes the government could and should do more “because that would stem the root cause of the problem. Without product, [counterfeiters] can’t operate.”