What 7 challenges can retailers expect in 2024?

RPC's Retail Compass explores what lies ahead for the retail and consumer sector

AI, assets in the metaverse, 'ambush' marketing and 'social washing' are just some of the new challenges facing retailers and consumer brands, reveals the latest edition of Retail Compass from international law firm RPC. 

Retail Compass unpacks the insights of RPC lawyers with extensive knowledge of the international retail and consumer sector and considers what steps industry leaders might consider as legal, regulatory and policy changes loom ahead. 

Highlights include: 

Social washing 

Retailers are increasingly aware of the significant risks associated with greenwashing, but how many are aware of the risks associated with social washing, the practice of trading off perceived or advertised social credentials which are not reflected in the way the business operates? Consumer brands that do just that can run the risk of not meeting the competing demands of their stakeholders, which in turn will harm profit, market share, reputation and, ultimately, business longevity.  

AI and personal data

With AI online and in store, retailers and consumer brands are revolutionising operations, from the automation of supply chains to detecting fraud. But could AI also pose a risk to the protection of personal data? Regulators in the UK and Europe have confirmed data protection laws apply to all technologies that use personal data, including AI systems. New legislation is on the horizon, with retailers and consumers advised to take steps now to ensure they can comply with evolving data protection laws.  

Protecting assets in the metaverse 

Triggered by an increase in trademark filings for non-fungible tokens (NFTs) and virtual goods and services in the metaverse, the UK Intellectual Property Office (UKIPO) recently issued guidance indicating how such goods and services are to be classified. There remains debate as to whether NFTs are assets in their own right, or whether they act as a means of authenticating ownership of an underlying asset, such as artwork or luxury goods. The UKIPO considers it as the latter, meaning IP rights will need to be used to protect the NFT itself. 

Cracking down on unfair practices 

The Digital Markets, Competition and Consumers (DMCC) Bill is designed to promote growth in the UK economy by ensuring free competition among businesses. It will also strengthen the Competition and Market Authority (CMA) powers to crack down on unfair practices, such as using fake reviews, so-called 'drip pricing', subscription traps and pressure selling. The regulator will also have the authority to identify and stop unlawful anticompetitive conduct more quickly and the ability to decide when consumer law has been broken.

Opening the gates 

The EU Digital Markets Act (DMA) will require digital "gatekeepers", for example large e-commerce platforms, social network sites and hospitality booking platforms, to comply with the obligations outlined in the legislation by 6 March 2024 (having entered into force,1 November 2022). The new obligations are intended to ensure the openness of important digital services. While it's essential that gatekeepers are aware of their new obligations under the legislation (or face substantial fines), smaller e-commerce platforms, SMEs, innovative consumer brands and retail tech startups should remain alive to potential impacts and opportunities arising from the DMA.

Ambush marketing 

The recent decision in Puma SE v Transport for London (TfL) provides a timely reminder for brands to pay attention to ambush marketing rules when running campaigns at or near sports events, particularly ahead of the Paris 2024 Olympic and Paralympic Games, the UEFA Men's Euro 2024, and the Women’s Rugby World Cup 2025. TfL removed Puma's adverts from Wembley Station ahead of the UEFA Women’s Euro Final in 2022. While Puma was not an official sponsor of the Euros, TfL claimed they'd received complaints from UEFA and The FA that Puma's adverts (showing football players in Puma sportswear) amounted to passing off and ambush marketing – an attempt to gain recognition by associating themselves with an event without consent. Brands that are not official sponsors are advised to take key steps to ensure they strike the right balance between innovative marketing and not misleading the public into thinking there is a connection between a brand and an event.

Arresting issue 

The Economic Crime and Corporate Transparency Bill will make it easier for prosecutors to pursue corporates operating in the UK for criminal offences, including the introduction of a new "failure to prevent" fraud offence. It will also impose identity verification requirements on directors, People with Significant Control (PSCs) and anyone submitting information to Companies House, expanding reporting requirements and giving additional powers to Companies House. Retailers should prepare for compliance with the new requirements, including ensuring their fraud prevention procedures are robust. 

Jeremy Drew, Partner and Co-head of Retail and Consumer at RPC, says: “Retailers and consumer brands are being asked to grapple with legislative changes, increased regulatory scrutiny and emerging technology at a time of economic uncertainty, but will doubtless be more resilient if they prepare now for what lies over the horizon." 

Partner Karen Hendy, Co-head of Retail and Consumer, adds: "A raft of legal changes are in the pipeline for businesses in 2024, including the much-anticipated Economic Crime and Corporate Transparency Bill. Retailers should ensure they have robust fraud prevention procedures in place so that they are better able to comply with the new requirements."

Ciara Cullen, Partner, and Head of Food and Drink, concludes: "As we enter 2024, retailers and consumer brands will continue to grapple with new and emerging challenges, including the ethical and legal questions posed by the rising use of AI (which looks here to stay). Those businesses that embrace AI, develop strategies to manage its impact and use it in a safe, responsible and transparent way will position themselves to maintain the trust of consumers in this multi-dimensional world.” 

For more insights and to read the full report click here.