Arming your legal team for the new normal

The last 12 months have seen significant shifts in the way business is conducted within the consumer goods, food and retail sector. While some of these shifts will gradually reverse as countries ease their restrictions over the course of 2021, others will remain in varying degrees. We will see permanent changes across the sector, some of which are highlighted below.

Changing appetites in retail

The online environment has always been a competitive realm that is rife with potential for IP infringement. With the pandemic driving online shopping to record highs and forever transforming the world’s shopping habits and retail landscape, brand protection and enforcement online has become more important than ever. However, with widespread IP budget and resources cuts in the retail sector in 2021, companies find that they need to do more with less, developing a more comprehensive and cost-effective IP strategy, or recalibrating their current IP strategy, to optimize the brand’s full potential online and cope with the multi-faceted IP challenges posed by the greater ease of counterfeit and copying in the digital realm. From brand clearance to trade mark filing policies to IP enforcement and commercialization, investing in the right tools and technology could allow companies to maximize the IP budget and minimize risks associated with infringement and licenses and other IP/commercial contracts.

Embracing technology

A plethora of technological developments were implemented across the sector in response to the pandemic. Some examples include:

• several businesses adopting cashless models in a bid to curb the spread of the virus
• using big data to forecast consumer preferences
• offering virtual product demonstrations, often via the use of Augmented Reality and
• widely using e-commerce to deliver products.

This has been something of a sampling period for more long-term changes in how retail may evolve via new technologies. Starbucks coffee implemented a system in some of its outlets in which customers would place an order on the Starbucks app before entering the store, and then collect their order at their chosen outlet. While the system was implemented in order to reduce foot traffic in Starbucks stores (in the interests of preventing viral spreads through crowding) the approach has had a lot of long-term positive potential. Customers appreciate minimal friction in their buying experience, such as shorter wait times between deciding to make a purchase and receiving it. In a frictionless model, customers could place their order for food or beverage as they leave home, and the outlet could prepare their order once the retailer is notified by the app that the customer is travelling to the outlet. When the customer arrives, the order is ready and there is no need to queue. A number of American retailers, among them major grocery and hardware chains, have implemented similar systems, which remain popular even as the pandemic appears to be waning.

To further optimize the customer experience, retailers could adopt cloud computing and Internet of Things technologies to instantly access massive sets of market data and analytics which offer greater visibility into the supply chain and real-time insights about their customers. E-commerce marketplaces have been successful in using predictive analytics and artificial intelligence (AI) to make informed and data-backed decisions in their marketing strategies, regionally and globally.

However, retailers have become a prime target for cybersecurity attacks in recent years given their ever-growing collections of customers’ personal details and credit card information. The financial consequences and reputational damage associated with data breaches could be significant, in particular with tougher data privacy laws coming into place worldwide. It is therefore vitally important for retailers to develop a comprehensive approach to manage and protect customer information and to have a contingency plan in place to respond to data breaches and cyberattacks.

Environmental, social and corporate governance (ESG)

Several ESG related concerns which have been on the radar for some time came to the fore over the past 12 months. Consumers now demand product offerings which are sensitive to environmental concerns.

This includes supply chains which reduce carbon output, recyclable packaging, food and drink which do not harm biodiversity, and recyclable consumer goods made from recycled materials.

Such is the demand for environmental sustainability that several asset managers offer ESG-specific funds. Low-carbon, low-waste manufacturing is likely to be the future of retail, fuelled by the growing number of ESG-minded consumers and technological developments.

In just one example, innovative students and faculty at the Fashion Institute of Technology invented a yarn like fiber made from algae. It can be dyed, knitted, or woven, and is strong and flexible. Elsewhere, designers and scientists are collaborating to develop fabric dyes from bacteria. These experiments are prime examples of reducing waste at source in the retail sector.

The emergence of ESG as an essential part of business strategy could potentially reshape the model for IP rights protection in the field of green technology, with potentially greater emphasis on collaboration and IP sharing among companies and research institutions achieved by patent, trade secrets and licensing arrangements which aim to benefit both innovators and society at large.