Welcome to our monthly quick fire round up of the Retail and Consumer sector's legal and market developments that should be on your radar this February. This edition features:
AI, and agentic & social commerce disrupting the sector
The retail sector is undergoing unprecedented disruption, driven by rapid advances in AI, the rise of agentic commerce, and the growing influence of social commerce platforms. These changes are fundamentally reshaping the consumer journey and experience, presenting both challenges and opportunities for retailers through 2026.
Key points:
- AI and agentic commerce are transforming retail operations and the consumer journey, with platforms like ChatGPT, Amazon’s Rufus, and agentic browsers enabling faster, more personalised product discovery and decision-making.
- Social commerce, particularly via TikTok Shop, is rapidly growing, now accounting for around 5% of UK online sales and significantly influencing categories such as beauty, with TikTok becoming a leading beauty retailer.
- The circular economy and second-hand marketplaces, such as Vinted and eBay, are gaining traction, with around 50% of UK consumers buying and selling second-hand goods, prompting retailers to develop their own resale and recycling initiatives.
- The complexity and variability of the consumer journey, spanning physical and digital touchpoints, AI-driven research, and social validation, make it increasingly challenging for retailers to deliver seamless, cohesive experiences and maintain brand discoverability in an AI-driven landscape.
- Retailers also face ongoing margin pressures from increased operating costs , such as changes to National Insurance, National Living Wage, business rates, and packaging tax, alongside the need to invest in new technologies to remain competitive.
To discuss further, please contact Shakeel Dad.
Retail Crime/Martyn's law update
Martyn’s Law (Terrorism Protection of Premises Act) introduces significant new security obligations for retailers and other public-facing businesses, requiring them to implement practical measures to reduce the risk and impact of terrorist attacks. The law applies to premises and events with a capacity of 200+ people, with enforcement and substantial penalties from April 2027. Retailers should begin preparations now, ahead of detailed statutory guidance expected this year.
Key points:
- Applies to UK premises/events accessible to the public with capacity of 200 or more, including shops and shopping centres.
- Requires “reasonably practicable” security measures, such as evacuation plans, lockdown procedures, communication systems.
- Non-compliance risks fines up to 5% of worldwide turnover and potential criminal liability for directors/managers.
- The Security Industry Authority (SIA) will regulate and enforce, with enforcement starting April 2027.
- The Home Office is expected to published Statutory guidance on compliance; businesses should review current security arrangements and prepare for new requirements.
To find out more about these obligations, contact Priscilla Addo-Quaye.
EU ESG Regulation Update
Key updates to the EU sustainability agenda at the end of 2025 include:
- A further 12-month delay to the entry into application of the EU Deforestation Regulation (EUDR) from 30 December 2025 to 30 December 2026. EUDR applies to a wide range of commodities, such as timber, coffee, cocoa, cattle, palm, rubber, soy, affecting many retailers with EU supply chains and retail networks. A further review of the Regulation by the EU Commission is due in April 2026; with the expectation that further simplifications will be introduced to reduce administrative burdens.
- Conclusion of the negotiations on the EU "Omnibus I" proposal to amend the Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CSDDD) to simplify and streamline reporting and due diligence requirements. Key amendments include:
- significant increases to the thresholds for compliance for both Directives, thereby reducing the number of companies in scope
- introduction of so-called "value chain caps" to limit the information that can be requested from smaller business partners in the supply chain
- deletion of the requirement in CSDDD to adopt a Paris-agreement aligned Transition Plan. Businesses should revisit scope assessments for CSRD and CSDDD, as many businesses/EU subsidiaries may now fall outside the scope of the regime.
- Further information on these significant EU updates is available via the Risk Radar.
In the UK, the FCA published on 30 January its much-anticipated consultation (CP26/5) on updating the UK Listing Rules to incorporate mandatory reporting as against the UK Sustainability Reporting Standards (UK SRS) in Annual Financial Reports for accounting periods beginning on or after 1 January 2027. This would replace the existing reporting regime which requires listed companies to report in line with the Task Force on Climate-related Financial Disclosures (TCFD) Recommendations on a 'comply or explain' basis. Our detailed explanation and analysis is available here.
To discuss these developments further, please contact Rachel MacLeod or Stephen Barry.
Online Safety Act Risk Gauge
AG's Online Safety team has launched the Online Safety Act Risk Gauge, a digital tool designed to help businesses quickly assess their obligations under the Online Safety Act (OSA). The OSA establishes a new regulatory framework requiring service providers to identify, mitigate, and manage risks arising from illegal content, as well as content and activity that may be harmful to children.
Retail and consumer businesses may be affected if their websites or apps allow users to post reviews, interact with others, share content (such as product photos or experiences), or communicate via chat or forums. Examples include e-commerce sites with user ratings or Q&A sections, online marketplaces with user-to-user communication, brand or retailer apps with customer forums or social sharing features, and social commerce platforms enabling user-generated content.
You can access the OSA Risk Gauge here.
For queries or to discuss the OSA’s impact, contact Adrian Mansbridge, India Barlow, or Annie Jones.
