December 19, 2017

A New Era For Retail: E-Commerce Comes To Grocery

Amazon’s acquisition of Whole Foods earlier this year has sparked speculation in the grocery industry about the future of its traditional business model which sees consumers visiting brick and mortar stores. On the heels of Amazon’s announcement, several of Canada’s largest retailers began advertising, and in some cases, rolling out their e-commerce strategies. Both Loblaws and Walmart Canada recently announced the launch of grocery home delivery services, beginning in Toronto as early as this month. Metro already offers online grocery shopping in Quebec, and plans to expand to Ontario in 2018. Longo’s introduced digital shopping last year, and Sobeys recently announced hundreds of job cuts, in part owing to “technological change”. While this latest wave of e-commerce undoubtedly brings efficiencies and convenience to consumers, it comes with unique challenges, including legal compliance in relatively unchartered industry territory.  As grocery boosts its e-commerce presence, industry players must turn their minds to the legal implications of doing business online. This requires considering the methods of advertising employed and the collection and management of personal data.

Canada has one of the most robust privacy regimes in the world. Recent amendments to its anti-spam legislation (CASL) demonstrate the strict approach taken towards the safeguarding of personal information and individual privacy – key considerations for any e-commerce strategy. The CASL amendments have strengthened the law around the sending of unsolicited e-mail and other communications (i.e. SPAM) by requiring that recipients provide their consent to being contacted. Canada’s federal privacy statute, the Personal Information Protection and Electronic Documents Act (PIPEDA), which regulates the collection, use and dissemination of personal information, requires e-commerce participants to have privacy policies in place, and to appoint privacy officers to address consumer complaints. Gone are the days of companies collecting vast amounts of personal data and freely using it to market and promote to consumers. In order to do business online, however, retailers must collect personal information, such as names, addresses, e-mails, phone numbers, financial information, and the like. The limited use and safeguarding of that sensitive data is a key consideration for any online business. Grocers are just the latest example of industry participants competing for market share via e-commerce, and in doing so, should ensure they have adequate legal strategies in place to address the implications of transacting online.

Online retailers also face new challenges in digital advertising and marketing. In light of the global reach of online communications, traditional legal considerations for in-store advertising are no longer sufficient. The cornerstone of advertising law is a prohibition on false, deceptive, and misleading ads. In retail, consumer complaints often centre on misleading pricing or promotions. In the online realm, ask yourself whether it is misleading to advertise US dollar prices to Canadian consumers. Must a website be viewed in Canada for a consumer to be considered “Canadian”? Must advertised pricing cater to the location of the viewer? These are some of the complex questions facing traditional retailers looking to establish a foothold in e-commerce.

Last year, the Ministry of Health and Long-Term Care launched its “Healthy Eating” strategy, which includes proposed restrictions on advertising certain foods and beverages to children.  It might, however, prove difficult for authorities to determine whether an ad is targeting children. In the past, ads appearing on weekend morning television were relatively easy to identify as targeting children, while those appearing on late-night television or in the newspaper were often deemed to be adult-oriented. In the online era where people of all ages have access to internet content, identifying the target audience has become increasingly complex, thereby making it difficult for advertisers to comply with applicable laws.

The regulation of e-commerce happens at two levels: the federal government primarily handles aspects relating to privacy and the internet, while the provinces are responsible for local commerce and consumer protection.  This multi-layered governance structure combined with the unique issues facing online retailers requires a thoughtful legal approach and carefully planned out e-commerce strategy for grocers – the latest example of a traditional industry looking to do business online.