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 September.
In this edition:
Retail market look ahead
The UK retail market has proved more resilient than expected despite cost-of-living pressures and uneven consumer spending, supported by stronger-than-forecast economic growth, moderating inflation and improving consumer confidence. The sector is undergoing significant structural change, driven by the rapid growth of social commerce like TikTok Shop, intensifying competition from Chinese retailers such as Shein and Temu, the expansion of marketplace and second-hand retail models, and the emergence of AI-driven “agentic commerce” that is reshaping how consumers discover and purchase products. Retailers are also facing higher labour, regulatory and operating costs, placing pressure on traditional e-commerce models. Businesses with strong omnichannel capabilities, combining digital channels with physical stores, click-and-collect and in-store returns, are best positioned to navigate an increasingly fragmented and competitive retail landscape.
Please do get in touch with Shakeel Dad if there are any particular areas you would like to discuss.
The EU’s New Product Liability Directive – key points to note
The EU’s new Product Liability Directive will increase scrutiny across the entire product supply chain, extending risk beyond manufacturers to distributors, importers, retailers and software providers. Businesses should use the implementation period to review supply chain visibility, contractual protections, product governance and record-keeping processes, given the Directive’s enhanced disclosure obligations. While the regime is European, UK-based businesses selling into or operating within EU markets may also be affected, making early readiness and board-level engagement essential.
Please do get in touch with Cecile Burgess and Mark Chesher if there are any particular areas you would like to discuss.
Sanctions on West Bank Settlements – key risks for retailers
The UK Government’s proposed West Bank sanctions will introduce targeted restrictions on goods, services and commercial activities linked to Israeli settlements, with implementation expected following a six to nine-month transition period. The key risk for retailers is likely to be supply chain traceability, as companies will need greater visibility of product origins and supplier networks. Businesses should use the lead-in period to strengthen supplier due diligence, review sourcing arrangements, and ensure sanctions compliance frameworks are fit for purpose.
Please do get in touch with Harriet Territt, India Barlow and Zulfi Meerza if there are any particular areas you would like to discuss.
Supermarkets impose bans on ultra processed foods
Consumer attitudes and regulatory scrutiny of ultra-processed foods (UPFs) continue to intensify, with brands continuing to reformulate to seek to remove certain ingredients. The move comes amid growing calls for industry-wide action on healthier products, including warning labels and tighter restrictions on unhealthy foods. Combined with new Scottish rules restricting the placement and promotion of less healthy products from 1 October, these developments create increased commercial, regulatory and reputational pressures for food manufacturers, retailers and consumer brands.
Please do get in touch with Hayley Anderson if there are any particular areas you would like to discuss.
Spate of cyber attacks highlighting operational risks across the sector
ASOS data breach linked to agentic marketing AI
Recent press reports have confirmed that the UK based fashion retailer ASOS suffered a cybersecurity incident leading to a data breach. Current information suggests that the attackers managed to access an employee account using social engineering to obtain log in credentials and then accessed customer information via a third-party platform used by ASOS. Reports suggest that the compromise may have been via an agentic marketing platform called Simon AI which is linked to Snowflake, a platform specifically referenced by the attackers. Whilst precise details remain unclear there are some key features of this incident which are worthy of note and illustrate the continuing developments in the threat landscape. Firstly, if it is the case that attackers have managed to gain access to personal data via hacking into an agentic AI tool that would reinforce the position that use of agentic AI is another risk surface that requires close consideration by businesses using such tools. Secondly the fact that the attackers moved so quickly to contact affected customers directly suggests that this tactic, of leveraging customer concerns to put pressure on businesses, is moving up the timeline in terms of levers attackers will be prepared to pull in order to exert pressure.
Please do get in touch with James Moss if there are any particular areas you would like to discuss.
Supermarket fridge hack raises operational safety risk
By contrast the recent hack of numerous supermarket fridge units in France appears from online reports to have exploited a much more basic technique; the password to every single one of the internet connected fridges (is reported to have been 'admin + today's date'. If so, the same method could very easily be used for any internet connected devices in the UK businesses should urgently check the position and look to reset passwords where needed.
Retailers should treat this incident as a warning that smart refrigeration and other connected devices sit squarely within their operational safety risk, not just their cyber risk. A compromise of these systems can rapidly become a food safety, fire safety, product liability and business interruption event, particularly where units overheat, stock is exposed to unsafe temperatures, or there are battery and charging equipment considerations. It also raises an important practical question for retailers reviewing their risk assessments and controls to ensure they address connected equipment, remote access vulnerabilities, overheating plant, battery charging activities and the physical consequences of a smart-device failure.
Please do get in touch with Erin Shoesmith and Lee Hughes if there are any particular areas you would like to discuss.
Don’t Miss – our FT Innovation Report
In collaboration with the Financial Times, we recently conducted a major study of 200 organisations exploring how businesses are approaching technology transformation, the challenges they face and how they can turn ambition into business value.
On 10 November, we're bringing together senior business, technology and legal leaders at Frameless, London. If you'd like to join us for the conversation and hear more about the findings, we'd be delighted to see you there
Register your interest here.
