UK retailers have faced a number of challenges in recent years, with competition from online brands and the rising cost of business rates compounding financial issues caused by the longest recession in recent history. Yet while these issues are now gradually decreasing thanks to an upturn in consumer confidence and attempts to rejuvenate the high street, new legislation to be introduced in June could pile a whole heap of new worries onto the shoulders of the UK’s struggling small businesses.
The UK implementation of the EU Directive on Consumer Rights, known as the Consumer Contracts Regulations, will come into force on June 13th and is expected to have an effect upon every retail business in the country. For some, it will take only minor changes to comply with new legislation, but others will face huge financial repercussions due to the need to update systems, processes and even staff training techniques.
For the most part, the changes will particularly apply to retailers who have introduced an online shopping method such as home delivery or click and collect, as online shopping remains one of the foggiest areas of consumer rights at present. Yet multinational retailers already operating in countries such as Germany or France should not find this too difficult as regulations are already in place in certain EU member states – instead, it will be small retailers who bear the brunt of the changes in legislation.
Small retailers, for instance, may find profit margins will be affected by the new “right to cancel”, as the minimum period in which consumers may return goods in exchange for a full refund will be extended from 7 working days to 14. Not only could this see a rise in the so-called “wardrobing” – where consumers purchase an item of clothing, wear it once and return it – but could also see retailers left with a surplus of unwanted goods for which the supplier must still be paid.
Although retailers will admittedly be given more rights to recover a sum up to the full contract price when a returned item’s value has been diminished due to customer negligence or unreasonable care, this in itself will initially be expensive to implement. Terms and conditions will have to be altered in order to inform consumers of the new store policy, while in-store staff will have to be re-trained to learn not only the new terms contained within the Consumer Contracts Regulations, but also the laws covered by the British Consumer Rights Bill which is currently in the legislative process.
With a survey conducted by Close Brothers Finance revealing that more than 40 per cent of small business owners would support Britain’s exit from the EU should the opportunity be presented, complex and costly legislation such as the EU Directive on Consumer Rights is hardly likely to win supporters to the cause amongst small retailers.
Do you think the EU should have legislative powers over small businesses in the UK if they do not trade overseas in EU member countries, or do you believe the Consumer Rights Bill should be sufficient in protecting the rights of both consumers and retailers?
