Eversheds’ Annual Retail Conference 2015 – key highlights

18th February 2015

Eversheds’ Annual Retail Conference 2015 – key highlights

On Thursday 12 February Eversheds hosted its annual Retail conference to discuss and debate key topics and issues impacting the sector.

Keynote speech, Mike Ahanchian, BRC - The changing face of Retail
The  Retail conference was kicked off by Mike Ahanchian, Head of Insights at The British Retail Consortium, delivering his keynote speech on the changing face of retail.

Retail has evolved rapidly, and will continue to change was the key message from Mike's presentation.

The connected consumer is demanding more from retailers both online and in-store, which businesses need to adapt to. 2014 saw online sales continue to perform well with double digit growth, while the increase in consumer spending and confidence has been driven by GDP and unemployment figures. Visits to retail sites reached over 32.6bn, an average 1027 visits per second.
All is not lost for the high street, however, Mike assured retailers that there is a need for real estate; importantly retailers need to ensure they have the right level of real estate to engage with consumers and use the space as a service and experimental hub.

Innovative delivery methods and creating effective dialogues between retailers and consumers will be key for the future of retail. Advances in technology and innovation within the sector has seen the introduction of robots delivering products to changing rooms, virtual window shopping and pop up stores. The personalisation of products, discounts and promotions will also deliver success for businesses according to Mike.

The future for the industry remains positive. The changing face of retail will provide multiple opportunities for businesses and is a sector that will remain vibrant.

 
Omnichannel strategies – some of the key challenges, a panel discussion
Over the past few years, omnichannel has quickly become a familiar concept to retailers and consumers alike. Moderated by Eversheds’ Head of Retail, James Batham, our panel of Eversheds experts, James Hyde, Paula Barrett and Simon Jones were joined by Andrew Revel, Commercial Manager, Retail Institute and Sadiq Mohammed, Business Development Manager, Serco, to debate the various challenges that retailers are facing in the midst of evolving omnichannel strategies.

The panel emphasised the need for retailers to address and plan for eventualities early on to avoid supply chain difficulties. Sadiq highlighted customer order fulfilment as a key cause of frustration and advised that businesses need to integrate the notion of planned and unplanned business ‘peaks’, such as Black Friday, into their contracts with suppliers. Simon recommending that retailers take care to ensure the availability of funds to keep pace with fast-moving technological advancements throughout supply contract life cycles. Andrew also flagged the reality of spikes in sales, and for retailers to consider their returns policies and procedures all the way down to product packaging in order to ensure healthy resale rates.
Simon encouraged businesses to be wary of the traps around cloud-based technology service charges and to make sure that agreed service levels are pragmatic and fit-for-purpose.  There was also a resounding call for retailers engaging with multiple cloud vendors so not to affect the quality of service delivered to the end consumer.  From a data privacy perspective, Paula echoed the Article 29 Working Party’s tough stance that: regardless of the difficulties retailers face in terms of negotiating watertight contracts with vendors, they are ultimately responsible for the data they choose to store in the cloud.  Paula also highlighted that retailers should insist cloud vendors provide a full set of data protection clauses and pay close attention to the detail, in order to avoid potential reputational damage in the event of a data security breach.  James reiterated that data security breaches are a real concern – with the average cost of dealing with the worst cyber security breaches falling in the region of £600,000 to £1.5 million.
The panel went on to discuss the rise of the big data phenomenon.  Paula suggested that retailers consider how cloud-based vendors will seek to monetise data stored in the cloud and whether it is appropriate for them to lay down contractual restrictions to control this.  Andrew commented on the development of data sources, highlighting that retailers have more data at their fingertips than ever before;  and the challenge that big data poses – extracting meaningful and usable information from multiple data streams.  Retailers should consider issues where personal data is involved, such as what is being done with the data, are privacy notices up to date and are the right consents in place. IP implications including who owns the data sets should be taken into account; and retailers need to take care that this is covered in consultancy agreements, where needed.
The panel ended the debate with top tips for omnichannel strategies:


  • Ensure uniformity and consistency across the consumer experience by considering all touch points and spotting potential issues early on;

  • Explore existing channels in order to create new opportunities for growth;

  • Replicate the success of ‘bricks and mortar’ strategies in online spheres to minimise the risk of basket abandonment;

  • Consider the impact that 3D printing might have and embrace the opportunities that it presents; and

  • Be transparent about what is being done with customer data – try working with marketing teams to help create accessible, user-friendly and innovative privacy notices.


For more information, please contact:
James Hyde
Partner
Tel: +44 113 200 4066
jameshyde@eversheds.com

Paula Barrett
Partner
Tel:+44 20 7919 4634
paulabarrett@eversheds.com

Simon Jones
Partner
Tel:+44 113 200 4049
simonjones@eversheds.com

 
Employment update
The retail sector is a large employer of the UK workforce; Mark Pipkin, Principle Associate, and Kate Sheehan, Senior Associate, discussed the key employment and pensions law issues currently impacting the sector.

The recent case of Lock –v- British Gas Trading has established that commission payments should be taken into account when calculating holiday pay. In addition, the Bear Scotland & Others case, handed down just before Christmas, established that payments for compulsory overtime should have been taken into account when calculating an employee’s holiday pay. At first, there was concern that this decision would expose employers to a large number of historical claims going back to 1998. Whilst this is a possibility in some cases, the potential for employees to bring retrospective claims is significantly limited somewhat by the specifics of the decision itself and the Government’s subsequent introduction of The Deduction from Wages (Limitation) Regulations 2014. Retailers should identify all variable elements of pay and working arrangements and consider the pattern of holidays taken by employees to establish potential liability; as well as consider the definition of “pensionable pay” to establish potential liability for historic pensions contributions.
The recent changes to the flexible working regime are likely to impact the retail sector more than any other. Since 30 June 2014, flexible working requests can now be made by all employees with at least 26 weeks’ service, rather than only employees with caring responsibilities.
The upcoming general election may also bring about a number of employment changes; depending on which party is elected employees could see an increase in national minimum wage, an increase in paternity leave and an end to exclusive zero hours contracts.
For further information, please contact:
Mark Pipkin
Principal Associate
Tel:+44 115 931 7569
markpipkin@eversheds.com

Kate Sheehan
Senior Associate
Tel:+44 113 200 4569
katesheehan2@eversheds.com

 
International expansion planning workshop - a panel discussion 
International expansion has become the next step for many retailers to enable them to scale their business. In recent years we’ve seen a number of British brands open stores outside the UK, as demand for British style and brands continues to rise. At the same time foreign retailers have looked to the UK for prime locations to set up shop.

Susan Samuel, Partner, was be joined by Neil Tunbridge from UKT&I and Professor Matthew Robson from Leeds University Business School for the panel session which focussed on the ways in which retailers can expand after they have saturated the UK sales markets.
Clients often ask “where do we go now?”; Susan led the discussion around the key considerations when selecting a new market. Retailers should consider demographics, legal barriers to entry, and competitors to ensure the chosen market is right for the brand; Susan also discussed and reviewed the control investment model. Matthew  commented on international franchising, benefits of which mean retailers are provided with greater on-the-ground access, yet also means a certain loss of control that retailers should consider.
Neil then discussed the UK’s digital export strategy as an alternative to the more traditional methods of accessing foreign markets. With the rise of online, retailers were advised to consider the agreements they may already have in place, such as franchises and joint ventures, and the implications online sales may have on businesses in international markets if consumers can order directly via websites rather than making purchases in store.
The panel advised retailers looking to expand internationally, whether it be physical stores or with a digital offering, that it is vital to have a robust and thorough plan in place to ensure a successful launch. Eversheds’ practical guide to international expansion looks at the key stages from identifying markets through to launch, and can be found here.
For more information, please contact:
Susan Samuel
Partner
Tel:+44 113 200 4259
susansamuel@eversheds.com


Retail in Asia – the benefits and challenges 
Asia has become a market of particular focus for the retail sector and offers a number of opportunities for many businesses. The market is set to continue to grow with low unemployment rates, an increase in disposable income and a youthful population all key contributors to growth. Kirstin McCracken, Senior Associate, from our Hong Kong office, presented the benefits and challenges the Asia market has for retailers.

The Asian market is very different to Europe and the USA, and is a very diverse market in itself. Retailers should consider geography, religion and popular culture when entering in to Asia.
An opportunity for many retailers is to exploit the rise of technology within the market - 42% of the world’s internet users are in Asia; South Korea has the highest broadband penetration in the world, while China, Japan, South Korea, India, Australia are the largest online markets. Mobile is the dominant method of accessing the internet; 37% of purchase are made through mobile devices and it is projected there will be 700 million mobile users by 2017, which highlights the potential the Asia market offers retailers.
Kirstin also discussed key legal issues for retailers to consider including data privacy, labelling, compliance and competition.
Asia is a rapidly changing and developing landscape and retailers looking to expand should harness technology to maximise the opportunities in this market.
For more information, please contact:
Kirstin McCracken
Senior Associate
Tel: +852 2186 4952
kirstinmccracken@eversheds.com


Consumer Rights Bill
The Consumer Rights Bill which will take effect on 1 October 2015 has been expected since the Government announced its plans to merge existing consumer laws in 2005. Matthew Gough, Partner, and Mary Kelly, Principal Associate, discussed the key changes and implications of the Consumer Rights Bill as well as providing insightful practical steps that retailers should be considering in light of these changes.

The Consumer Rights Bill aims to consolidate as well as strengthen the position of the consumer in the UK. The legislation is innovative in that it will result in UK consumers being given greater protection than consumers in other EU member states.
The Bill consists of four sections; Goods, Digital Content, Services and Unfair Terms. Current implied terms applicable to goods such as ‘fitness for purpose’ will be replaced with statutory guarantees, and pre-contractual information, which is given to consumers, will now form part of the contract. This is an important change as retailers need to ensure the correct information is shared with consumers prior to purchase. Consumers will also be given a new set of statutory remedies, including a new ‘early right to reject’ where defective items can be rejected within 30 days.
There are extensive changes to the digital sector which is interesting to many retailers given the growth in this area. Digital content will no longer be classified according to the medium on which it is received and will be treated similarly to goods even when provided online.
Terms applying to services will be much wider, anything that is said or written to the customer by retailers, which is taken into account by the consumer, will be treated as term of the contract. The unfair terms regime has also undergone a change with the rules now applying to notices such as disclaimers on receipts, and not just the terms of the contract.
In preparation for the introduction of the Bill there are a number of practical steps that retailers should consider, including reviewing sale processes, policies and websites, and providing guidance and training on the Consumer Rights Bill to staff who provide customer care and sales advice.
The Consumer Rights Directive has been adapted into local legislation of European countries. Our Consumer Rights Directive – multijurisdictional guide is available here and summaries the changes the Directive has made to the local laws.
For more information, please contact:
Matthew Gough
Partner
Tel:+44 29 2047 7943
matthewgough@eversheds.com

Mary Kelly
Principal Associate
Tel:+44 113 200 4673
marykelly@eversheds.com

Demonstrating the value of in-house legal teams
General Counsel need to react to many different legal demands on a daily basis and at a time when many organisations are demanding more from their in-house legal function, the need to understand the demands placed on in-house teams is vital. Graham Richardson, Head of Eversheds’ Consulting, presented a fascinating talk on how in-house teams can demonstrate their value to the wider business.

Results from Eversheds’ study, The Client’s Revolution, show that 75% of GCs believe power has moved from firms to clients and 73% of In-house Counsel have changed or reduced the number of external legal advisors.
Key components of a successful legal team include: a clear strategy, key metrics and technology.

Graham advised health checks are a useful tool to ensure strategies are clearly defined and communicated; that there is buy-in from the teams and wider business, including senior management; the team is aligned to the wider business; and strategies are regularly reviewed and progress measured.

Compliance scorecards to review subjects from anti-bribery, product compliance to employment and investigations can also be effective measures when used in conjunction with other metrics, such as spend by month and by matter, external vs. internal spend, or the number of law firms being used.

Graham concluded that General Counsel are in control. There is currently a time of great change in the legal sector and it is a time for teams to seize the opportunities and make the most of their position by focusing on key components and measures to demonstrate value.

 

For further information, please contact: 

Graham Richardson
Partner
Tel:+44 29 2047 7392
grahamrichardson@eversheds.com

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