RPC’s Retail Compass Autumn edition: What challenges do retailers face post-pandemic?

RPC, the international law firm has launched the Autumn edition of its Retail Compass, which explores legal and policy changes that are set to impact the retail industry.

RPC says some of the issues that retailers should be aware of as they navigate the post-pandemic landscape are:

• UK retailers who breach new EU consumer laws face harsh penalties. The EU’s Consumer Omnibus Directive prohibits retailers from publishing fake reviews and deleting negative ones. Base prices of goods or services must be available for a minimum of 30 days before they can be reduced and advertised as a ‘sale’. UK retailers and e-commerce sites selling into the EU may also have to disclose to consumers if pricing has been personalised, for example, charging higher prices if a customer has viewed an item online several times. 

Retailers found to be in breach may be liable for fines worth a minimum of 4% of their company’s annual turnover in the relevant EU member state. The new law comes into force on May 28 2022 and will impact retailers with a presence in an EU member state.

• Retailers must be transparent about green claims or face enforcement action. Following an investigation last year that showed 40% of claims made online about a businesses’ environmental credentials were misleading, the Competition and Markets Authority is clamping down on ‘greenwashing’. 

Businesses found to be making inaccurate or misleading claims about sustainability could face enforcement action from January 2022. The Advertising Standards Authority has already taken action against a global car manufacturer, a budget airline and meal-kit business, which were forced, at considerable cost, to withdraw ads that made environmental claims.

• Increase in tech disputes as retail sector accelerates its transition to e-commerce. Lawyers are now dealing with a growing number of disputes between tech suppliers and retailers relating to IT contracts, problems with software, delays in development projects and disputes over payment. That rise in disputes has been partly driven by the sudden surge in investment in e-commerce by retailers during the lockdown.

Disputes relating to e-commerce, in particular, have risen, as retailers were forced to quickly implement major new e-commerce investments to cater to the rapid shift to online shopping during Covid-19. 

• Biggest change to data protection regulation since GDPR. Businesses that transfer data outside of the EU must provide new legal guarantees about data privacy. Businesses must also disclose the steps they take to protect data and agree with customers how their data will be processed. They will have to prove they have safeguards, such as encryption technology, in place to prevent customers' data from falling into the wrong hands.

Standard Contractual Clauses will need to be included in new business contracts from September 27th and existing contracts by December. This creates challenges for retailers operating in multiple countries, which potentially could have hundreds of contracts to renegotiate.  

Jeremy Drew, Co-Head of Retail at RPC says: “Retailers have experienced a tumultuous time in the past eighteen months. With the lockdown finally behind us it would have been better to have a breathing space. Unfortunately, there are numerous legal and regulatory challenges in the UK and the EU in the months ahead.” 

Karen Hendy, Head of Corporate at RPC says: “Regulators have made it clear that they expect full compliance with new regulations or enforcement action may be taken. Retailers will want to be all over these changes.”

View the latest version of Retail Compass Autumn edition here