Head of Retail & Consumer | Head of Risk Advisory
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In this month's review of trends in the retail and consumer sector, our experts look at updates and activity in the sector including:
Recycling has been on the retail horizon, particularly over the past few months. Retailers including H&M, Primark, Boohoo and Nike came under fire in July after an investigation carried out by The Changing Markets Foundation found that the companies were sending to-be-recycled clothing across the world to either landfill or to be burned. The clothing formed part of various take-back schemes, with the schemes aiming to recycle clothing and contribute to a circular economy.
The investigation’s findings caused some concern across the industry (and amongst consumers) and has served as a reminder for retailers to ensure they live up to the promises they make, particularly in the sustainability space. This links in with the ASA’s increased focus on misleading green claims with their investigation into such claims having commenced in February and with stricter enforcement measures expected once the investigation is concluded.
Environmental issues are high on consumers’ agendas, with shoppers recently speaking out against the London Fashion Week and the impact it is having on fast fashion waste and the overconsumption of clothing. And the idea of moving towards a circular economy is not new – in fact, commentators have stated that such a move is now a “business imperative“.
So, what have retailers been up to over the past month to make sure they are contributing to the circular economy? We take a look at some examples below.
It is an important time for retailers. Not only do they need to stay ahead of the curve when it comes to the online vs. in-store experience and navigate the ongoing cost-of-living crisis more generally, but they must also seriously consider how to move away from fast fashion to a more circular supply chain. Not to do so could be fatal, given the current trends in consumer behaviour. On the plus side, it is an exciting time for collaborations in the sustainability space – something that can only be for the good of the planet, in the longer term.
Earlier this month, Which? published a report outlining the data collection practices of major brands across smart speakers, TVs, washing machines, video doorbells and security cameras, and suggested that businesses may be collecting more data than they need through these devices.
In smart speakers, for example, Which? found that Bose smart speakers share user data with Meta, the parent company of Facebook. Google Nest products request contacts and location on Android, but not on Apple’s iOS, despite the app functioning the same on both operating systems. Google Nest, Bose and Sonos all requested precise location data – something that one would think was unnecessary for a speaker that is designed to stay in the same place. Some of the most surprising findings were from smart washing machines connected via app. LG asks for the customer’s name, date of birth, email, contacts, precise location and phone number. With Miele, tracking of precise location is enabled by default, and is required to use the app.
As we have outlined in previous editions, the UK GDPR requires organisations to ensure personal data they collect is adequate, relevant and limited to what is necessary in relation to the purposes for which it is processed. Stephen Almond, Executive Director of Regulatory Risk at the ICO released the following statement in response to the Which? report:
“People should be able to enjoy the benefits of using their connected devices without having excessive amounts of their personal data gathered. This simply isn’t a price we expect to pay.
To maintain trust in these products companies must be transparent about the data they collect and how they use it and ensure that the data is not used or shared in ways that people would not expect. The ICO is developing guidance on data protection and Internet of Things (IoT) devices and we will act where we don’t see the rules being followed.”
From the IoT retailer’s perspective, it will be essential to ensure that privacy policies are clear in their purposes of processing and those purposes are limited to what is necessary to perform the services for the consumer. Although consumer data is valuable when used to target marketing strategies and increase value, it is likely that many terms and conditions of use will need to be redrafted with this new guidance and a stricter interpretation of the UK GDPR in mind. Where there are multiple documents and complex references between each, retailers will need to rethink how these can be simplified and reduced into a more digestible format so each consumer is aware of the terms, should they choose to accept.
The Federal Trade Commission (FTC) – an independent agency of the United States government with the primary goal of the enforcement of civil antitrust law and the promotion of consumer protection – has sued Amazon, alleging the online retail giant uses monopoly power to overcharge consumers and exploit sellers on its marketplace, in violation of US antitrust law. Other acts wherein Amazon allegedly exploits its monopoly power include:
“Our complaint lays out how Amazon has used a set of punitive and coercive tactics to unlawfully maintain its monopolies… raising prices and degrading service for the tens of millions of American families who shop on its platform and the hundreds of thousands of businesses that rely on Amazon to reach them.” FTC Chair Lina Khan said in a statement.
The lawsuit calls for a permanent injunction against Amazon, to keep the company from “engaging in its unlawful conduct and pry loose Amazon’s monopolistic control to restore competition.” It was also alleged that Amazon made extensive efforts to frustrate the FTC’s investigation and hide information about its internal operations.
Amazon has since responded to these claims, calling this a “misguided lawsuit… that [would] actually harm consumers”, forcing higher prices to be featured, less reliable Prime shipping, reduced options for small businesses, and make Prime more expensive. Amazon believes that the very practices that the FTC is challenging has helped to spur competition and innovation across the retail industry, which has produced greater selection and opportunity for both Amazon customers and the businesses that sell in Amazon’s store.
This is not the first time that Amazon has been sued by the FTC: in June, the FTC sued Amazon for allegedly tricking customers into signing up for Prime without their consent. In May, the FTC and the US Department of Justice brought a lawsuit against Amazon, due to the violation of children’s privacy laws through the Alexa voice assistant. Amazon paid $25 million here in settlement fees.
The Amazon litigation is the latest legal manoeuvre in the FTC’s crackdown against various markets dominated by Big Tech – the FTC is fighting for Meta to unwind its acquisitions of Instagram and Whatsapp and is trying to block Microsoft’s acquisition of Activation Blizzard.
It will no doubt be interesting to see whether the FTC’s interpretation of the retailer’s online business strategy is upheld as anti-consumer, and if regulators in other jurisdictions continue to follow suit with cracking down on big tech’s monopoly over various industries, particularly retail. Notably, the European Union’s antitrust regulator has also targeted Amazon, along with Google parent Alphabet, Apple, Meta, Microsoft, and ByteDance, as “gatekeepers” subject to new competition rules under the Digital Markets Act. Critics of big tech’s monopoly will need to hold tight however – the case is expected to take years to resolve!
Head of Retail & Consumer | Head of Risk Advisory
Clean Energy | Energy & Infrastructure | Projects, Infrastructure & Construction
Clean Energy | Energy & Infrastructure | Retail & Consumer
Data, Privacy & Information Security