McCarthy Tetrault’s 8th Annual National Consumer Products and Retail Summit was held on February 22, 2018.  Following on the success of the Summit, at this time we wanted to provide a mid-year update and recap of the key takeaway points from our distinguished experts.

Current trends in the Changing Retail Industry Continue

Ted Salter, Partner, Advisor at Ernst & Young

• How shoppers prefer to interact with their favourite brands are continuing to change as channel options evolve. Effective retailers have learned that establishing customer intimacy will better able them to evolve along with their customers.
• The digital native brands have limited history to draw upon and therefore have learned to effectively sense and respond to the changing customer requirements in a very timely manner. Those in the more traditional channels would benefit from shifting towards attempting to anticipate outcomes based on future planned events versus using the past to forecast the future.
• The more traditional approach to leading practices is less relevant now and even often now seen as an inhibitor to innovation. Instead, effective retailers are drawing up good design principles when developing customer experience outcomes.
• The definition of convenience is evolving. In many instances time has now replaced location as the key success driver in customer experience.
• Don’t fixate too much on what your more successful competitors are doing at the moment. It’s likely only a step in their broader journey, instead focus on where you want to take your customer.

Product Compliance: Common Issues for Retailers

Martha Harrison, Partner, McCarthy Tétrault LLP

• Ensure that your products and their marketing materials comply with Canada standards and advertising laws.
• Have an effective recall plan in place before a recall is initiated.
• Include robust protections in commercial agreements such as Distribution and Marketing Agreements which clearly outline the Parties’ responsibilities (both financial and operational) where a product regulatory issue arises.

Below is a link to a recent blog posting by Martha Harrison and others on McCarthy Térault’s International Trade and Investment blog:

https://www.mccarthy.ca/en/insights/articles/department-finance-announces-countermeasure-surtax-remission-framework

Artificial Intelligence in Retail

Briana Brownell, PureStrategy.ai, Shyam Thyagaraj, Accenture and Carole Piovesan, McCarthy Tétrault LLP

• Artificial intelligence (AI) is having a profound impact in the retail sector. AI systems can analyze huge amounts of data to produce valuable insights and predictions to inform corporate investments and strategies, and consumer behaviour. Investments in AI can offer deeper personalization for customers thereby enhancing loyalty and driving revenue. Early adopters of AI are expected to significantly surpass their competitors in annual profit growth by 2030.
• AI, robotics and the Internet of Things (IoT) are also revolutionizing the physical retail space and making the shopping experience much more efficient.
• While there is much to be excited about, the use of AI systems must be approached thoughtfully. AI ethics and the appropriate orientation of data to generate valuable outputs are critical to successful AI implementation. 

Below is a link to a recent announcement about Carole Piovesan’s appointment as Innovation Expert by the federal Minister of Innovation, Science and Economic Development, as part of Canada’s national consultation on digital and data transformation:

https://www.mccarthy.ca/en/about/news-and-announcements/carole-piovesan-chosen-innovation-expert

Below is a link to a recent blog posting by Carole Piovesan on McCarthy Térault’s “Cyberlex” blog:

https://www.mccarthy.ca/en/insights/blogs/cyberlex/canadian-developments-ai-and-technology-ethical-considerations-innovators

Update on NAFTA Renegotiations and CETA Implementation: Impact on Retailers and Consumer-Facing Businesses

The Honourable Jean Charest and John Boscariol, McCarthy Tétrault LLP

• If they haven’t already, retailers and consumer products companies need to be undertaking a comprehensive review of their supply chains to assess the impact of increasing turmoil in international trade, especially regarding the United States – immediate adjustments, including changes in supply sources, may be required to mitigate impact
• It’s not just US measures that you need to be concerned about – Canada and others have imposed retaliatory measures against the United States that impact a wide range of retail and consumer products (and their inputs and components); as of July 1, 10% and 25% surtaxes are now being applied by Canada against various US imports
• You should be carefully reviewing the key drivers of your exposure to the widening trade war, including tariff classification, rules of origin and customs valuation. Tools such as duty drawback and special remission mechanisms are also available to mitigate the impact of significant and unexpected tariffs or surtaxes on your import and export activity for both inputs and finished product
• Despite the threats and challenges, there are significant opportunities in terms of new consumer markets and sourcing – the Canada-EU CETA, the Trans-Pacific Partnership, Canada’s free trade agreements in force with 14 other countries (plus exploratory discussions and negotiations with 35 countries, including China and India) have created an unprecedented framework of liberalized trading rules for goods, services and technology

Below is a link to a recent blog posting by John Boscariol and others on McCarthy Térault’s “International Trade and Investment” blog:

https://www.mccarthy.ca/en/insights/articles/canada-imposes-retaliatory-measures-response-us-steel-and-aluminum-tariffs

Key Legal Issues Facing Consumer Facing Companies in 2018: Employment, Real Property, Competition and Environmental

Tim Lawson, Charlene Schafer, Jonathan Bitran and Selina Lee-Andersen, McCarthy Tétrault LLP

EMPLOYMENT

• With the legalization of recreational use of cannabis across Canada on October 17, 2018, many employers are taking steps to develop and implement or review and revise workplace policies to specifically address recreational cannabis use. Employers should also consider how they are going to manage the impact of recreational cannabis use on their workplaces more generally, including issues of workplace productivity, absenteeism, accommodation, motivation, consumption on breaks, and workplace safety.
   
• The recent #metoo and #timesup campaigns have turned the head of many employers to address problematic workplace behaviour and ensure sufficient workplace violence and harassment policies are in place. Numerous employers have experienced an influx of sexual harassment complaints and are looking to ensure employees are provided with a safe, harassment-free workplace. 

Below is a link to a recent article on McCarthy Tétrault’s “Employment Advisor” blog with respect to the legalization of cannabis and workplace issues that employers should consider:

https://www.mccarthy.ca/en/insights/blogs/canadian-employer-advisor/legalization-recreational-cannabis-and-workplace-issues-employers-should-consider

 

REAL PROPERTY

• Demand continues for more user-friendly leasing opportunities with customization, unique features, bricks and mortar “showroom” leasing whereby customers come in to try out what they are interested in and then go home and purchase online – creativity and flexibility is needed from landlords in terms of changing dynamics and the space they are offering to retailers
• The market is seeing continued demand for large spaces for distribution/logistics/warehousing centres and rents remain strong in this sector

COMPETITION

• Although big data is changing the way that business is conducted, the Competition Bureau’s view is that its existing analytical principles and enforcement tools remain appropriate. As such, it is important to continue focusing on the fundamentals, such as credible and effective compliance programs to deter price-fixing and misleading advertising, especially with respect to prices.

ENVIRONMENTAL

• As companies increasingly look to incorporate environmental considerations into their business decisions and strategic planning, it is important for them to assess not only regulatory compliance, but also opportunities for reducing operational costs while advancing sustainability initiatives and enhancing consumer confidence in their products/services and supply chain processes.