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The Fashion Industry: Behind the Curtain
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The Fashion Industry: Behind the Curtain

The Fashion Industry: Behind the Curtain
September 7, 2022

Delve into the world of fashion, where technology, globalization, and sustainability are revolutionizing the industry. However, counterfeits and brand abuse remain a threat.

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The fashion industry is no stranger to change, especially to those which are customer-driven and related to digitization. These constant changes have seen the industry adapt quickly to meet consumer needs and expectations.

The global pandemic and an increasingly borderless digital economy have seen the fashion industry overcome supply chain disruptions, inconsistent demand, increased competition for talent, and higher advocacy from consumers. This has led to new trends such as sustainability, and an increase in online shopping.

Moreover, the adoption of new technologies such as social shopping, NFTs, and the Metaverse, have given rise to new agents of change for the industry and new trend setters. Long gone are the days when fashion houses, big style magazines, and designers were the ultimate creators and decision makers. Now, consumers, and influencers have a far greater say in the matter.

Fashion industry in numbers

The global fashion, textile, and accessories industry, is the fourth biggest sector in the world, delivering 2% of the world’s annual GDP. In fact, if the fashion industry was a country it would be one of the most powerful in the world. Globally it employs more than 300 million workers, and in south eastern Asia, fashion works represent around 40% of all manufacturing jobs.

During recent years, fashion e-commerce has grown exponentially, becoming the biggest B2C e-commerce segment. It was worth $878.3 billion in 2021.  Future predictions are optimistic and expect a 9.1% annual growth rate until reaching US$1,164.7 billion by the end of 2025.

In terms of the biggest categories for 2021, apparel ($584.1 billion) takes the top spot, followed by shoes and accessories ($164.8 billion). These positions are predicted to remain the same for the following years,  however, we will see an increase in the value of each of these categories, especially in bags and accessories.

The future of fashion

Digitization and NFTs

Digitization and sustainability will continue to be the key drivers of growth for this industry (The State of Fashion, 2021) and will be the main priorities of related companies. Brand virtualization is a major trend for businesses, as it allows hyper-personalized communication between brands and their consumers and it offers huge growth opportunities.

For example, INDITEX’s strategic priority in 2022 is to digitize all its brands and integrate their online channel, which represents 25.5% of all sales made in 2021 financial year, with the offline channels. In fact, Inditex plans are to finish the digitization strategy they started a decade ago in which they have invested €11 billion with plans to invest an additional €1.1 billion during 2022.

One major trend that will continue to grow are NFTs. They arrived with a bang in 2021 and many believe that they have the potential to revolutionize digital ownership, creative structures, and the way brands interact with their consumers.  Fashion brands all over the world such as Paco Rabanne, Gucci, Louis Vuitton, and Prada have all joined this new world of possibilities. 

Discover more about NFTs and how they are impacting the global fashion industry in our recent blog article.

Sustainability and product passports

The fashion industry remains under fire for polluting . The truth behind all of sustainability and circular economy strategies is that the fashion industry is the third most polluting industry (behind construction and food), and it is responsible for creating 1.2 billion tonnes of carbon dioxide each year.

Consumers are increasingly more outspoken about those companies that do not prioritize ethical and environmental issues, and as a consequence, we have seen more  sustainable and circular brands launching during recent years. Products that have a lower CO2 print, less water usage or , as it is the case in circular economies, that are made out of old garments are becoming more popular.

This new behavior, also referred to as conscious or purposeful purchasing, has pressured many brands into changing their business strategies. Some examples are: SHEIN, which has shifted its focus into reducing gas emissions in its factories and in its supply chain; ZARA, who has teamed up with Renewcell to transform textile into cellulose pulp to create the products of its new line Renewcell x Zara; or H&M which is now facing a lawsuits in the United State under the claim of “green-washing” marketing.

That is why product passports, and unique identifiers placed in garments, are taking their role, as they can help consumers detect when and where the fashion garment was produced, enabling the tracking of the manufacturing process and helping guarantee that the product is in fact sustainable, reduces “greenwashing”, and foremost, they can also help guarantee the authenticity of products, and reducing the likelihood of unknowingly buying a counterfeit fashion item.

Online protection and cyber-resilience

Online shopping is on the rise and so is cyber-crime. In fact, 53% of fashion executives believe that it is very likely that their brand will be targeted in 2022. (The State of Fashion 2021).

As digitization continues, it is little surprise that retail was the fourth most targeted industry. As a result, the pressure to protect customers' data and brand profits has tightened.

In this sense, there is an increasing trend towards tightened regulation within data protection and transparency, especially within the European Union, and it is noticeable in their new laws: Digital Service Act or the General Data Protection Regulation (GDPR) which is the strictest regulation regarding data protection worldwide.

Social shopping

Social shopping relates to the sale of products so it reduces the gap between each funnel stage and encourages fast conversion and impulse purchases. 37% of fashion executives cited social commerce as one of the top three themes that will impact their business in 2022 (The State of Fashion, McKinsey 2022)

Social shopping is an additional factor that can contribute to online selling strategies of brands (besides traditional e-commerce shopping such as in digital marketplaces or the company’s web or APP) and help fashion brands increase their online sales revenue.

Threats are not vintage, in fact they are nothing but in vogue

Leaders in the market are taking action to figure out how to implement the future trends within their company and for that they are creating new digital, environmental and social strategies to give consumers what they want: more diversity and inclusion, more ethical practices and more online protection. 

However, existing threats remain:


Counterfeits have plagued the industry since the very beginning and despite their low quality, poor durability, and sometimes being made of dangerous materials, some people buy them to demonstrate a social status that they would otherwise be unable to afford, or purchase them without realizing it’s a fake branded item.

One way or the other, fake branded fashion items deprive the industry of more than $50 billion each year. But it’s not simply financial damage, the negative impact on consumers confidence and brand reputation is also harming fashion brands. So much so that Adidas, German fashion and footwear multinational company, launched an advertising campaign in 2018 titled Fake Hurts Real to call out the harm that purchasing fake shoes could inflict on consumers through a series of visual ads.

Social media reviews

As we have mentioned, social selling is a key fashion trend this year. Social media platforms such as Instagram or Tiktok organically incorporate opinions, reviews, and recommendations from its users as well as “likes”.

Our research says that 44% of online shoppers rarely purchase products with low ratings or negative reviews. For this reason, poor social media reviews and recommendations, which can be true or not, are a big threat to fashion brands in today’s digital economy. Especially when we consider that more focus is being placed on user generated content within the fashion industry.

Lack of visibility of your brand’s (and your competitors) mentions on social media platforms can be the reason behind your drop in sales and reputation. As such, social media monitoring has become increasingly important in recent years. It allows brands to monitor what is being said about your brand and your product and that of the competition, providing powerful data to make smarter strategic decisions.

Brand impersonation

Brand abuse is the unauthorized use of a brand and its intellectual property by third-parties. This infringement seeks to piggyback on the success of well-known fashion brands for their own benefit.

As a result of unsatisfactory customer experiences with brand impersonators, the official fashion brand’s reputation, and positioning is affected. When this brand impersonation is spread throughout digital channels, customer dissatisfaction with the official brand increases and as a consequence,  sales and revenue are reduced, which means that brands don’t have the capital to invest in expansion or in the innovation the market demands. 

While many fashion brands remain blissfully unaware of this threat, brand impersonation is widespread within Google search results, digital marketplaces, and social media networks.

Distribution control problems

In today’s increasingly borderless digital economy, brands operate in a multitude of channels and markets (physical and digital), and have extensive distribution networks. Even though it comes with great benefits it also carries negatives such as: loss of control, higher risk of suffering from grey markets or parallel imports as a direct consequence of poor visibility. 

Grey markets, which are trading authentic fashion items in unauthorized channels or by unapproved distributors,  are not illegal. However it is a big challenge for the industry to monitor and control. The threats that gray market pose to fashion brands are quite substantial and normally include damage to the commercial relationships, revenue, and future growth opportunities.

Parallel imports, which happens when third parties import authentic products to an unapproved market without the owner’s consent, are also on the rise and can harm the fashion brand’s reputation as it can not control the  information which comes with the item, the quality of the product or the packaging. 

Solutions made to measure

The fashion industry is composed of a strong but delicate network based on a dependency relationship that is necessary for the proper functioning of the industry. However, new consumer trends and behaviors, and digitization may put all of this in check and create a new status quo where companies are no longer given a free card but are held responsible for how they perform their daily business operations.

As digitization continues to take the world by storm, companies have to quickly adapt if they wish to remain leaders in their respective market. New trends, such as NFTs or product passports, will be in line with this digitization revolution, however others will be important to overpass customer’s demands: ethics, transparency and traceability.

The threats that companies face, which in fact are not vintage but in vogue, might also make it difficult to adopt the new trends we have briefly described at the beginning of this article. Nevertheless, companies must take action so that they can adopt them and continue to excel in their day to day activities and their relationship with their stakeholders (customer, sellers, and society).

At Smart Protection we specialize in making the internet a secure place for brands and its customers. We monitor and gather valuable information about your product and your brand and remove fake branded products from the digital ecosystem, including Google search results, social networks, and digital marketplaces and thanks to our relationship with third parties we can act quickly and limit the impact such threats have on your product sales, reputation, and customer safety.

On top of that we also protect fashion brands online selling strategy, through our solutions (distribution control and seller tracking), enabling them to monitor their products and their sellers activity with a cross-channel and 360 view.

Smart Protection offers brands a 360º view of the different threats that exist and emerge through digital channels, while providing the mechanisms to take action and delist any infringement found online. All this allows you to continue innovating and adopt new and emerging trends with complete peace of mind.

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