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The Article 29 (A29) Working Party has recently published their opinion paper on the rise of facial recognition technology and the concerns that this brings for the protection of personal data online. This note looks at the issues of online privacy and the concerns for data privacy as facial recognition software becomes more widely available.

The A29 Working Party is the European body which comprises leading representatives from each data protection supervisory authority in the EU (in the UK, this is the Information Commissioner’s Office); its opinions are therefore particularly influential, if not binding.

Last year Pitmans published a briefing explaining the issues of privacy at the time Facebook changed their ‘tagging’ service for photographs to incorporate facial recognition technology. For further information, click here.

Since then, the availability and application of the technology has grown exponentially; as its accuracy and deployment expands, this technology could be used for the most routine events in every day life – but also by advertising companies, collecting market information based on attendance monitoring and profiling to tailor targeted advertising messages.

The A29 Working Party has identified facial recognition technology as being used for authentication or verification for devices or online services. However, the application of this technology may be naturally extended from the online to the offline world. From a defence and security perspective, retinal scans and other biometric data access are already in use at a number of airports and conditional access facilities; in addition, full facial recognition systems are reportedly already used by security agencies to identify known criminals at sporting and live events by using the technology to identify particular faces amongst the crowd (e.g. known hooligans at a football match or members of the public at the London Olympics).

Similarly, access to live events, venues and concerts has become more sophisticated than merely paper tickets – organisers continue to explore ways in which they may combat the growing grey market in second hand ticket sales which diverts income, and brand value, away from events and the artists. Methods include tickets containing photographs, bar codes or employing near field communication (NFC) technology. Fully automated facial recognition technology is a natural technological progression for those industries where secure access is an essential requirement.

But such applications raise data privacy concerns and consequently companies controlling or processing the data may be in breach of data privacy laws, unless such measures and new technologies are balanced against an individual’s right to privacy. While the A29 Working Party’s opinion on facial recognition focuses on online and mobile, the principles apply equally to anyone collecting and using data for facial recognition services.

The A29 Working Party consider that where a digital image contains an individual’s face, which is clearly visible and allows identification of the individual then such an image would be considered personal data. Therefore, where a reference template is created from an individual’s image, this template will also be personal data if it contains a set of distinctive features of an individual’s face which can be linked to the specific individual and stored for later use. The only instance where a template is likely not to be considered personal data, would be where it was not associated with an individual’s record, profile or original image – but clearly this would limit the application of the technology. Importantly, the template and corresponding profile (or personal details) of the data subject in question do not need to be held by the same entity – it may still constitute personal data where a data controller has the means to access the corresponding information needed to identify that individual (even where held by a third party supplier).

Directive 95/46/EC states the conditions by which the processing of personal data must comply. Article 6 states that images and templates must be relevant, and not excessive, for the purposes of facial recognition processing. As the images constitute biometric data, the processing of the personal data may only be performed if the informed consent of the individual is obtained prior to commencing processing or if another exception is satisfied under the Directive (e.g. for legitimate purposes pursued by the data controller – such as security for the venue in the light of perceived terrorist threats – provided it does not prejudice the rights of the individual concerned). The A29 Working Party note that some elements of processing may be necessary before consent is obtained, i.e. to verify existing records, but this should only be for the strictly limited purpose, and the information deleted immediately.

The digital images or templates stored must be used only for the specified purpose for which the have been provided – and for which consent has been sought or where another relevant exemption applies (as, for instance, in the case of the legitimate use exemption described above). The greater the sensitivity of the personal data concerned the more likely explicit consent will be required.

The A29 Working Party considers that technical controls should be implemented to ensure that third parties do not gain access to the data and use it in an unauthorised manner. As trials of cashless technology grow for events, it may be that this technology is used by individuals to purchase items using credit stored against their profile, for instance drinks or merchandise. Controllers should be aware of the parameters of consent and that data stored against a user’s profile, including data used for, or available from, facial recognition data, can be valuable information for advertising or marketing agencies profiling consumers.

Similarly, controllers and processors will need to guard against security breaches which may result in unauthorised access to the data. The A29 Working Party advises that technical measures such as encryption will need to be used for data storage and data transit. One method suggested by the A29 Working Party is for biometric encryption techniques themselves to be used so that the cryptographic key is directly bound to biometric data and is only re-created where correct live biometric sample is presented on verification.

To reduce such concerns the Working Party recommends minimising the data so that the images or templates stored do not contain more data than necessary to perform the specified purpose. Similarly, templates should not be transferable between facial recognition systems. Organisations developing or deploying such technology should also carry out Privacy Impact Assessments (PIA) and follow development methodologies based on Privacy by Design (PbD).

The everyday use of facial recognition software in society to improve security checks for employees, visitors or customers may soon become common place when using even the simplest of access control systems.

Data controllers and data processors should be aware of the law in this area as the technology becomes more prevalent. But consequently it appears the law may also need to keep abreast of various ways in which the software can be exploited to monitor and profile individuals using a range of services and ensure adequate protection for data subjects as the technology advances.

For further information please contact Philip James or a member of Pitmans’ Data Privacy & Information Law team.

Philip James
Partner, Digital Media, Technology and Data
T: 0207 634 4655
E: pjames@pitmans.com

A young fashion student, Nicola Kirkbridge, is taking on supermarket giant Tesco over the use of a photograph of her taken from her popular fashion blog. The photograph of Miss Kirkbridge modelling the latest fashion trends has appeared on a children’s jumper sold by Tesco throughout their stores nationwide without her knowledge.

According to reports, Tesco have responded to Miss Kirkbridge claiming they have no idea why this has happened and removed the product from sale pending a full investigation. The steps they have taken are understandable, as unless Tesco can establish that their use of the photograph was authorised, Miss Kirkbridge will have a claim of copyright infringement against them. For such a big player in the retail market to have used an unauthorised photograph highlights the confusion surrounding the use of photographs and other images that are available on the internet.

It is also interesting that Miss Kirkbridge’s photo had appeared on a blog, much has been written recently about the loss of control of photographs and other images when uploaded onto social media sites. Whilst uploading your photograph or image to a social media site doesn’t necessary mean that Tesco and others have the right to use that photograph, if you do wish to control the use of your photograph or image you should check the terms and conditions of any site before you upload it.

Pitmans’ Retail Team regularly work with retailers and their marketing and design teams to provide advice and training on the use and creation of photographs, images and designs with the aim of avoiding intellectual property infringement claims.

For further information please contact one of our Intellectual Property specialists within Pitmans’ Retail Team.

Sally Britton
Partner
T: 0207 634 4623
E: sbritton@pitmans.com

Alan Hunt
Solicitor
T: 0207 634 4632
E: ahunt@pitmans.com

A retailer, manufacturer or producer of a potentially defective product could face both civil and criminal liability if appropriate action is not taken. It is critical to take immediate expert advice upon acquiring knowledge of a potentially defective product because the consequences of a failure to do so can be severe.

Below is a summary of the main issues and guidelines to consider:

A. Legislation

The relevant Legislation makes regular references to obligations being imposed upon ‘producers’ under The Consumer Protection Act 1987 “CPA”. Producers can include retailers, suppliers and manufacturers and for the purposes of this article I adopt the collective term unless stated otherwise.

1. General Product Safety Regulations 2005 (the GPSR): general notes

a. Introduction to GPSR 2005: the UK General Product Safety Regulations 2005 implemented the revised General Product Safety Directive (2001/95/EC) (GPSD). The GPSD has increased the regulation of product safety in the UK and therefore businesses must  review their product safety systems to ensure compliance with the regime. The GSPD covers all products intended for use by consumers or likely to be used by consumers.

b. GPSR 2005, regulation 5: General safety requirement

Under regulation 5, there is a “general safety requirement” that producers will only place a product on the market if it is a “safe product”. A “safe product” is one which presents no risk or the minimum risk compatible with its use and which provides a high level of protection for consumers. If an unsafe product is placed on the market the manufacturer must notify the relevant enforcement authority (see regulation 9(3) on notification).

c. GPSR 2005, regulation 10(1): Enforcement

Under regulation 10(4), the relevant enforcement authorities in England are the local authorities, which are the county councils, district councils, London Borough Councils, the Common Council of the City of London and the Council of the Isles of Scilly.

2. Notification

a. GPSR 2005, regulation 9: Obligations of producers and distributors.

Where a product does not comply with the general safety requirement, both the producer and the distributor have a duty to notify the relevant enforcement authority (as defined in regulation 10(1)) of

i. information which will enable the product or batch in question to be identified;
ii. the risks that the product poses to consumers;
iii. details of action taken to prevent risk to the consumer.

b. This means that producers should monitor their products for potential risks. Such monitoring would give producers advance warning of product safety risks, so that they can take action before the authorities take the step of ordering a product recall. In addition, the GPSR 2005 require producers to keep a record of consumer complaints about the safety of their products (see regulation 7(4)(b)(ii)), and to notify the safety regulators if they find that the product is unsafe (see regulation 9 on notification).

c. This obligation to notify the relevant enforcement authority creates two questions for producers:

i. Issue 1: whether to notify. Producers must quickly assess the seriousness of the risk in order to decide whether the product is unsafe. The European Commission’s “Guidelines for the notification of dangerous consumer products to the competent authorities of the Member states by producers and distributors in accordance with article 5(3) of Directive 2001/95/EC” states that producers and distributors should take into account the severity of the possible damage and the factors which affect the level of the risk, such as the type of user and obviousness of the hazard, in deciding whether a product is unsafe and should be notified.¹

ii. Issue 2: when to notify. If the product is unsafe, then the European Commission’s Guidelines state that a company must inform the authorities: “without delay, as soon as the relevant information has become available, and in any case within 10 days since it has reportable information, even while investigations are continuing, indicating the existence of a dangerous product. When there is a serious risk, companies are required to inform the authority and in no case later than 3 days after they have obtained notifiable information. In an emergency situation, such as when immediate action is taken by a company, the company should inform the authorities immediately and by the fastest means”.

d. Once notified, the regulator will decide whether to send the information onto the European Commission and the other member states through the RAPEX system (the rapid alert system for non-food consumer products).

3. Recall

a. The GPSR 2005 place a positive duty on producers to recall dangerous products in certain circumstances.

i. Before the GPSR 2005 there was common law authority for a duty to recall unsafe products.

ii. Under GPSR 2005 producers now have a legal obligation to withdraw unsafe products from the distribution chain and/or recall them from consumers.

b. The GPSR 2005 regulation 15 gives national authorities the power to issue product recall notices. The authority can order the producer or distributor to take steps to protect consumers, including ordering a product recall.

i. Under regulation 10(5), while voluntary action on the part of producers and distributors is to be encouraged, an enforcement authority has the power take action “urgently and without first encouraging and promoting voluntary action if a product poses a serious risk”. The enforcement authorities must act proportionately to the seriousness of harm and take account of the precautionary principle. Acting on a precautionary basis means that regulators must take action even when they lack conclusive scientific evidence of the existence of the risk, as long as there is a likelihood of real harm.²

ii. Under regulation 15(4), an enforcement authority may only issue an recall notice if:

• other action which the authority may require would not suffice to prevent the risks

• the action being undertaken by the producer or distributor is unsatisfactory or insufficient; and

• the authority has given no less than seven days’ notice of intention to serve the recall notice and, where the person served has required the authority to seek advice from a person appointed by the Chartered Institute of Arbitrators (CIArb) to determine whether the product is dangerous or whether a recall notice is proportional to the seriousness of the risk, the authority has in fact sought and taken account of such advice.

Under regulation 15(5), the second and third requirements of regulation 15(4) do not apply for products which pose a serious risk and which require urgent action.

iii. Note that there is a right of appeal against recall notices. Under regulation 19(2)(d), a recall notice will be set aside if the product is not dangerous, or if the enforcement authority has not used recall as a last resort and the other requirements of regulation 15(4) have not been met.

4. Taking corrective action: when producers should make a recall.
“Product Safety in Europe: A Guide to Corrective Action Including Recalls”

The Guide aims to give producers and distributors of consumer products general advice about what they should do if they have evidence that one of their products may be unsafe.

a. Plan ahead: preparing your collective action strategy before you have a problem

i. Establish a policy and procedure for corrective action. Details of such policies may vary, but should include a statement by the company management of its aims and commitment to speedy corrective action to restore product safety, and to inform consumers fully of the corrective action being taken.

ii. Set up a corrective action team. The team should have knowledge of design, production, product safety/ risk management, quality assurance, distribution, public and corporate relations, legal, and accounts.

iii. Monitor information about the safety of your products. You need to have systems to collect and analyse information on report of accidents involving your products, customer complaints, warranty claims, insurance claims, any evidence of consumer abuse or misuse of the product.

iv. Keep good records to help trace products and identify customers and end users.

v. Assemble documents about the product’s design and safety

b. Decide whether to take action: assess the risk

i. Identify the hazard and its cause
ii. Estimate how many products are affected
iii. Identify who might be affected
iv. Consider what severity of injury could result
v. Assess the likelihood of such an injury
vi. Evaluate acceptability of overall risk

c. Taking corrective action: deciding what action to take

i. Decide whether corrective action needs to involve:

• Products in the supply chain and possibly
• Products in the hands of consumers

ii. Decide what corrective action needs to be carried out

If the overall risk is judged to be serious, the producer should take immediate action to:

• Inform the market surveillance authorities
• Isolate affected products
• Set up a communications programme to contact consumers

If the overall level of risk is judged to be moderate, the corrective action may be limited to products in the distribution chain, and it may be enough to withdraw those and give the authorities details of what is begin done

If the overall level of risk is judged to be low, corrective action may be limited to consideration of changes affecting products in design and production.

iii. Possible corrective action:

• Changing the design of products
• Withdrawing products from distribution
• Modifying products at consumers’ premises
• Return of products by consumers for modification
• Recalling products from consumers for replacement or refund

iv. Agree responsibilities and actions with distributors

v. Inform the market surveillance authorities

5. The European Commission published its revised Guidelines for the operation of “RAPEX” in January 2010.

a. “RAPEX” is a European rapid alert system for dangerous consumer products. It allows information about dangerous products to be given to other national authorities and the European Commission, in order to prevent the sale of these products. All the EU countries participate in the system. Under Article 12 of the GPSD, national authorities have a duty to notify the Commission, via the RAPEX system, of action taken to prevent the marketing and use of dangerous consumer products.

b. Manufacturers of consumer products marketed in Europe should be aware of the importance of the new RAPEX Guidelines, which give guidance on how the risk posed by consumer products should be assessed. This risk assessment process is relevant when a manufacturer has marketed an unsafe product. Regulators will follow this risk assessment process to decide whether the producer or distributor needs to notify regulators about the problem; what corrective action, up to and including recall, needs to be taken; and whether the issue will be communicated across Europe. The Guidelines and the new risk assessment process are expected to significantly change the way in which national authorities handle product recalls, and therefore the producer needs to understand the process.

c. Preparing  risk assessment under the new 2010 Guidelines:

i. Describe the product and its hazard.
ii. Identify the type of customer to be included in the injury scenario.
iii. Describe the injury scenario in which the hazard might affect the consumer.
iv. Determine the severity of the possible injury to the consumer.
v. Determine the probability of the injury arising.
vi. Determine the risk level.
vii. Check whether the risk level is plausible.
viii. Repeat in order to identify other injury scenarios and the risk posed by the product. Classify the risk as “low”, “medium”, “high” or “serious”.

6. Advice on crisis management

a. The new GPSR regime means that producers must respond much more quickly to a product crisis. Producers should prepare a crisis plan beforehand in order to manage a potential product crisis. The producer should decide on an internal recall team, external advisors to deal with the risk assessment process, and detail procedures for employees.

b. There are differences between how the General Product Safety regime has been implemented in different member states, and how each member state approaches risk management. Producers should be aware of these differences and address both national and international issues in their crisis management plans.

c. Manufacturing companies may consider extending their existing product liability insurance to include product recall insurance which will cover some of the costs of a product recall.

B. The potential consequences of selling, producing or manufacturing a defective product that caused injury and/or damage to property

1. Criminal Proceedings by a prosecuting authority

Health & Safety at Work Act 1974

a. Action against the company

i. Section 3 of HSWA imposes a duty on an employer to ensure, so far as is reasonably practicable, the health safety and welfare of persons not in its employment (i.e. the public).

ii. A company is guilty of an offence if it fails to comply with the duty imposed by section 3.

iii. A company would be liable to an unlimited fine in the event of conviction.

b. Action against Individuals

i. Section 37 of HSWA states that where an offence has been committed by a company (see section 3 HSWA above) is proved to have been committed with the consent, connivance or neglect of an individual director, manager, secretary or other similar officer who was purporting to act in such capacity he too shall be guilty of an offence.

ii. Therefore in order for a director or other similar officer to be guilty of this offence:

a. The company must be guilty of an offence
b. That director must have consented to that offence or wilfully ignored it or negligently allowed it to occur.

iii. A director guilty of such an offence faces up to 2 years in prison and an unlimited fine.

General Product Safety Regulations 2005

a. Action against a company or individual

i. Regulation 20(1) of GPSR creates an offence for a person to place an unsafe product on the market.  A company faces a maximum fine of £20,000.  An individual prosecuted for this offence can be imprisoned for up to 12 months and a fine.

ii. Regulation 20(2) of GPSR creates an offence if a person fails to notify an enforcing authority that a product it has placed on the market is not safe.  A company faces a maximum fine of £5,000.  An individual prosecuted for this offence can be imprisoned for up to 3 months and a fine. 

iii. Regulation 20(3) of GPSR creates an offence if a producer does not give notice to an enforcing authority that its product is unsafe and it is proved that the producer ought to have known that the product was unsafe.  A company faces a maximum fine is £5,000.  An individual prosecuted for this offence can be imprisoned for up to 3 months and a fine.

iv. Regulation 24 creates offences where a person obstructs an officer of an enforcing authority.  A company or person faces a maximum fine is £5,000.

2. Civil Proceedings by the Claimant

a. If a defective product has caused injury to a consumer or third party the injured persons will have a cause of action enabling them to bring a claim for damages against the retailers, producers or manufacturers. It will be easier for a consumer to establish liability against the retailer as that is the legal entity with whom the contract was made and as such the consumer will have the benefit of a breach of contract claim which would not be available if the consumer sued the producer or manufacturer of the product. In practice the claim is normally persued against the retailer and pleaded alternatively in negligence and possibly under the CPA. There would normally be a claim for damages for damages for pain, suffering and loss of amenity suffered, any loss of earnings, out of pocket expenses sustained by the individual and family sustained as a result of the injury and a claim for care and assistance provided by the family.  Upon receipt of any claim (or knowledge of any circumstance which may give rise to a claim under their insurance policy) the retailer must immediately notify their insurers.

b. Further, if the product caused damage to property then the purchasers of the product, the Claimants, can claim damages either directly or more usually by way of a recovery action by their insurers, for the physical damage to property sustained and if a business then potentially of loss of net profits sustained.

C. The potential consequences of selling, producing or manufacturing a defective product that caused death.

1. Coroner’s Inquest. In the even of a fatality arising there is an additional type of legal proceeding that will ensue, namely the Coroner’s Inquest.

a. The Coroner must investigate any unnatural death.

b. The Coroner’s inquiry is limited in nature and is designed to answer the following questions:

i. Who was the deceased?
ii. When and where did he die?
iii. How did he die?

c. The final question is a narrow question which means “by what means did he die”?

d. The inquest must not appear to determine any question of criminal or civil liability.

e. The coroner will reach a “verdict”. There are various possible verdicts, the most common of which are: accidental death, unlawful killing and an open (i.e. inconclusive) verdict.

f. The inquest will happen: it cannot be settled.

2. Criminal proceedings. In addition to the consequences outlined under B,  further serious criminal proceedings may ensue by virtue of the Corporate Manslaughter & Homicide Act 2007 (CMHA).

a. A company is guilty of an offence if the way in which its activities are managed or organised

i. causes a person’s death and
ii. amounts to a gross breach of a relevant duty of care owed by the organisation to the deceased.

b. The relevant duty includes a duty owed in connection with the supply of goods.

c. The company’s conduct must fall far below what can reasonably be expected of the organisation in the circumstances.

d. Only a company can be prosecuted for corporate manslaughter. On the basis of the present information, a prosecution under the CMHA appears unlikely, but cannot be ruled out.

e. If prosecuted and convicted of such an offence, a company faces an unlimited fine and might be subject to a remedial order (requiring the problem to be remedied in a particular manner) or a publicity order (requiring the company to publicise the fact of the conviction to the media).

3. Civil Proceedings on Behalf of the Estate

a. A claim for damages may be made on behalf of the Estate of a deceased
person, the extent of which may be extensive as it may include a loss of dependency by the deceased’s family.  The extent of the claim falls outside the scope of this brief article. 

D. The powers of the Trading Standards officers

1. Trading Standards Officers: general information

a. Trading standards officers exist to enforce consumer protection legislation in order to create a safe trading environment. They carry out inspections on business premises to establish whether Trading Standards legislation has been complied with.

b. An inspection may take place as part of a routine inspection programme, or because the officer suspects that an offence has been committed.

2. Trading Standards Officers: powers

a. Power to enter premises and inspect goods: an officer may at all reasonable times enter any business premises and inspect any goods

b. Power to request or require books, documents or records: an officer can require the production of documents relating to the business and may make copies.

c. Powers of seizure: if an officer has reasonable cause to believe an offence has been committed, he may seize and detain any goods in order to ascertain whether an offence has been committed.

3. Trading Standards Officers: if there is a breach of Trading Standards legislation

a. If the Officer finds a contravention of safety legislation, he may issue a suspension notice prohibiting the movement of specified goods for a period of six months.

b. If the Officer finds more serious contraventions of safety legislation, he may consider legal proceedings.

These Guidelines are not intended to be fully comprehensive and each case depends on it’s own facts. For further information please visit Pitmans Defendant Insurance Service, or contact:

Alan Davies
Partner
T: +44 (0)118 9570 300
E: alandavies@pitmans.com

¹ http://ec.europa.eu/consumers/cons_safe/prod_safe/gpsd/notification_dang_en.pdf

² Department of Trade and Industry Guidance Notes, paragraph 78

Introduction

The new Bribery Act, passed by parliament in 2010, was due to be implemented in April 2011.  However, at the end of January, a government spokesman said that the act would not come into force until three months after guidance to the act had been made available, which will be published “in due course”.

The Act is intended as a wholesale reform of the old bribery laws which were a complicated and confusing combination of statutory and common law offences from more than 100 years development of law in this area. The need for reform was widely acknowledged, however, the final result may have alarming consequences for corporate entities operating in the UK as many law abiding businesses could inadvertently break the new law if they are not careful.

Offences Under the Act

The Act re-classifies the basic bribery offences of bribing another person and receiving a bribe whilst also introducing two new offences. The first of these is in respect of bribery of a foreign public official. Additionally the Act also creates an offence for corporate entities of failing to prevent bribery occurring within their organisation. The only defence to this is if the corporate entity has put in place “adequate procedures” designed to stop incidences of corruption. This offence applies to any corporate entity that carries on its business, or even part of its business, within the U.K.

The penalties can be extremely severe.  Individuals could face a maximum penalty of ten years imprisonment and/or an unlimited fine if found guilty. Corporate entities may face an unlimited fine in respect of an offence under the Act.

Facilitation Payments and Corporate Hospitality

A facilitation payment is usually a payment to a government official to speed up a routine bureaucratic action. These are illegal under the Act. However the decision to prosecute will be at the prosecutor’s discretion and he/she will consider various factors including whether it is in the public interest to prosecute.

Most concerning however is that prosecutorial discretion will also have to be relied on in respect of corporate hospitality, which may fall foul of the Act. It has at present been stated that “routine and inexpensive hospitality” will be permitted however “lavish or extraordinary hospitality” will not. What remains unclear is where this distinction will be drawn. Will a box of chocolates and a bottle of wine be acceptable? Will tickets to a football match? The result is that corporate entities in the UK find themselves in the awkward position of having to guess what level of advantage provided by way of corporate hospitality is reasonable and what may result in prosecution.

Conclusion

In light of the Act, the need is now more urgent than ever for corporate entities to either commit to implementing systems to counter bribery or review their current anti- bribery procedures to ensure they will be effective in preventing bribery being committed on their behalf and to be able to rely on the “adequate procedures” defence in appropriate circumstances.

All corporate entities may wish to put in place staff training programmes and ensure they have written procedures that are readily available. It may additionally be worthwhile to incorporate such policies into employment contracts and allow the employer to terminate employment in the case of breach.

With such severe penalties under the Act, it has become crucial that the action that is taken does not merely have the effect of prohibiting bribery but that it actively seeks to prevent it where it might arise. For some businesses this will involve nothing more radical than an assessment of their existing policies however for others it could mean a complete overhaul.

If you would like further information on the Bribery Act 2010 from Pitmans please visit the Pitmans Corporate website, or contact our team direct.

Adam Dowdney
adowdney@pitmans.com
+44 (0) 118 957 0574

With the World Cup in South Africa about to get under way, I couldn’t help wondering what this might mean for the retail sector as it looks to increase levels of sales in these troubled economic times.

No doubt many retailers will be hoping that the celebration of our ‘beautiful game’ will result in a significant increase in sales for a whole range of football related clothing and merchandise, not to mention food and drink. Electrical retailers are likely to do well as people take this opportunity to buy new televisions (it is, after all, the first World Cup to be broadcast in high definition). And if the weather stays good, I’m sure that sales of barbecues are likely to increase significantly.

But it’s not just the more obvious items which seem to be selling out fast. I see that B&Q has said that it has almost sold out of a garden gnome dressed in the England team kit ahead of the start of the tournament this week. It is also selling garden furniture and equipment stamped with the England flag.

And then there are those people who have little or no interest in the World Cup (really?) who may be tempted to participate in some retail therapy of their own, a chance to make the most of less crowded high street stores whilst the rest of us consume or make use of our recent retail purchases sitting in front of the television.

All in all, I can only see the World Cup being a good thing for the retail sector and at least contributing to the levels of cautious optimism that seem to exist for many retailers at the moment. Certainly there seems to be a view amongst many retailers that good (or at least better) times are just around the corner and the World Cup will no doubt help to maintain that perspective.

But let’s be clear. I’m not for a moment suggesting that the World Cup should be seen as a solution for improving the medium to long term prospects for the retail sector. Most companies in the retail sector will by now have addressed the ‘cost issues’ side of the business. A lot of them will now need to focus more on strategic issues, addressing such issues as ‘are we selling the right products to the right customers’ and ‘in which markets/locations should we be selling’? Walmart, for example, is actively looking at increasing international sales in countries such as Chile and Brazil and is still trying to find a way to enter the Russian market (last month it was reported to be in talks to acquire an existing retailer there). It’s maybe a coincidence that Chile and Brazil have teams in the World Cup but Russia does not!

The World Cup may well help the retail sector in the short term but in the longer term I still think that the fortunes of the retail sector are going to remain closely correlated with the general economic climate. So in other words, let’s hope that England win the World Cup and that the new coalition government doesn’t take too long before it gets our fragile economy onto a more assured footing. Anything else will be a bitter pill to swallow.

Andrew Priest