Retail Compass Autumn 2023

Retailers are increasingly aware of the significant risks associated with "greenwashing". But how many have got to grips with the equivalent business risks of being accused of "social washing", the practice of trading off perceived or advertised social credentials which are not reflected in the way the business operates. Our roadmap for retailers provides some key anchor points which can help you navigate the risks, obstacles and opportunities.

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.

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.

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.

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.

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. 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.

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 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 UK IPO considers it as the latter, meaning IP rights will need to be used to protect the NFT itself.