Retail Lookahead 2026
In this Retail Lookahead, we look at some of the hot topics for this sector in 2026 which include:
- Advertising – Less Healthy Food Advertising Restrictions / HFSS Prohibitions
- Advertising – Use of AI
- Consumer - Digital Markets, Competition and Consumers Act
- Corporate Activity Overview
- Economic Crime and Corporate Transparency Act 2023 (ECCTA)
- Employment
- ESG
- IP issues - Lookalikes
- Packaging - the UK’s new Extended Producer Responsibility (EPR)
- Payment practices - Late Payment Consultation
- Product liability – Law Commission Review
- Real Estate
- Supply chain - Key Issues
Advertising – Less Healthy Food and Drink Advertising Restrictions / HFSS Prohibitions
The UK’s new Less Healthy Food (LHF) advertising restrictions came into force on 5 January 2026, with accompanying and now-final ASA/CAP guidance detailing operation and enforcement across TV, on-demand, and paid online media. It will be instructive to watch how brands adapt and interpret the new brand advertising exemption without “depicting” specific LHF products or otherwise failing the identifiability test, as compliance will turn on content and context, including realistic imagery, naming, and combinations of branding cues. Perhaps most interesting will be who gets it wrong, and why: early ASA judgments and rulings testing the limits of brand ads, influencer “payment” (including gifting), and retail media prominence will quickly clarify the grey areas and set practical boundaries for the market.
Advertising - Use of AI
The use of artificial intelligence in advertising has accelerated rapidly, with AI-generated content now featuring prominently in campaigns across every sector. This presents both significant opportunities and complex challenges. 2026 marks a pivotal moment in the regulatory landscape, as legislators and regulators in the UK and EU respond to the rapid adoption of AI with new transparency obligations, disclosure requirements, and enforcement priorities. For advertisers and brands, understanding these developments is essential to navigating the year ahead. For more detail, please see our Insight.
Consumer - The new Digital Markets, Competition and Consumers Act
The UK’s Digital Markets, Competition and Consumers Act 2024 (DMCCA) came into force in April 2025 representing a significant shift in UK consumer law regulation and enforcement. The DMCCA provisions around drip pricing, fake reviews and the CMA’s direct enforcement powers are already in force and are reshaping how consumer facing businesses price and sell. Looking ahead to 2026, the CMA’s first enforcement action will likely reach a conclusion and provide guidance and real-world examples of how to comply with the DMCCA. Whilst the DMCCA’s subscription contracts regime—covering how consumer-facing businesses renew—is expected to take effect in Autumn 2026 (although this is acknowledged as a tentative timeline). We also expect the CMA to provide increased guidance throughout the year in line with its commitment to provide timely, practical, and educational guidance.
For further information please see our Insights:
- Fake Reviews Under Fire: How the Digital Markets, Competition and Consumers Act 2024 (DMCC Act) Targets Misleading Practices
- The Digital Markets, Competition and Consumers Act 2024 (DMCC Act) and its implications on subscriptions
- Digital Markets, Competition and Consumers Act 2024 (DMCCA): What the UK’s new consumer rules now mean for consumer facing businesses
- Drip Pricing and Enforcement: How the DMCC Act is Changing the Rules
2025 saw steady but uneven progress in the UK retail sector. Despite a cautious consumer backdrop and lingering cost pressures, stabilising inflation and modest real income growth underpinned a gradual improvement in volumes through mid‑to‑late 2025, with a renewed focus on selective M&A, portfolio reshaping and investment in omnichannel and retail-media capabilities. Notable completions in 2025 included the acquisition of NK Space by US beauty giant, Ulta Beauty, and the acquisition of The Very Group by US private equity firm, Carlyle.
At the same time, operating headwinds persisted, notably higher National Living Wage and NIC contributions and sticky energy and occupancy costs, all squeezing margins and cash generation. Our international team of retail sector experts were here to support clients through these opportunities and challenges’
We expect momentum to carry into 2026, with demand favouring value and discount formats, affordable luxury in beauty and health & wellness, pet care, athleisure and home improvement, together with further growth in private‑label and resale.
Private equity investment in UK retail was subdued in 2025; however, the outlook for 2026 is more optimistic. We expect PE to target resilient formats such as value, discount and beauty, pursue buy‑and‑build in fragmented sub‑sectors, and lean into carve‑outs where corporates reshape portfolios. Take‑privates may also feature where public market valuations and exit routes remain mixed. We also expect retailers to execute partnerships and acquisitions across fulfilment, last‑mile logistics and data‑rich platforms to secure capacity, reduce shrink and enhance economics. Modernising supply chains and inventory planning, expanding click‑and‑collect and returns propositions, and monetising retail media and marketplace collaborations will remain priorities for transaction and joint‑venture activity. As shopping continues to blend online and in store and the market evolves, well prepared retailers will use selective acquisitions, partnerships and funding to build scale, secure stock, improve margins and unlock growth.
Economic Crime and Corporate Transparency Act 2023 (ECCTA)
The Economic Crime and Corporate Transparency Act 2023 (ECCTA) contains wide-ranging reforms to the way companies and limited partnerships in the UK are formed, managed and operated, and is a key legislative effort by the Government to enhance the prevention of financial crime in the UK. Since ECCTA received Royal Assent in 2023, its implementation has been taking place in a gradual manner.
In November 2025, the new identity verification (IDV) regime came into force. IDV introduces mandatory identity verification procedures whereby all new directors, members of LLPs and PSCs will need to verify their identity before taking up their positions. In respect of all existing directors, members and PSCs, there is a transitional period so that:
- all existing directors and members of LLPs must have their identity verified before the company's next confirmation statement date following 18 November 2025; and
- all PSCs must have their identity verified within 14 days of the start of their next birthday month (e.g. if a PSC's birthday is 19 December, they must complete their IDV check by 14 December).
PSCs who are also directors of the same company must notify Companies House of their personal IDV code with the company's next confirmation statement, and separately in respect of their position as PSC, in each case respecting the time limits noted above.
From 18 November 2025, companies are also no longer required to maintain a local register of directors, register of directors’ residential addresses, register of secretaries and PSC register. Instead, companies must provide this information directly to Companies House, where it will be held centrally. New appointments and changes to information relating to existing appointments (for example, a director moves house) must be notified to Companies House within 14 days of the change.
Further implementation of ECCTA provisions is expected in 2026, though exact dates are yet to be announced. It is expected that by the end of 2026, Companies House will (amongst other things) make identity verification of the presenters a compulsory part of filing any document; require identity verification of nominated officers of RLEs, corporate directors and individuals, who file information on behalf of a company at Companies House, and facilitate greater cross-checking of information and data between Companies House and other public and private sector bodies.
The much-anticipated Employment Rights Bill has now received Royal Assent (as the Employment Rights Act 2025) and key measures are scheduled to phase in through 2026 and 2027. The Employment Rights Act is set to bring significant changes to the Retail sector, known for its high staff turnover and flexible employment contracts. One of the key changes is the introduction of day-one statutory sick pay (SSP) for all workers, regardless of earnings. For more information, please see our Insight.
Significant developments are expected during the course of 2026. There is a renewed focus in the UK on Modern Slavery and, for those doing business in the EU, the Forced Labour Regulation. The EU Deforestation Regulation will also begin to apply. Please see our Insight for more information.
Looking ahead to 2026, brand owners should expect a firmer litigation and enforcement climate on “lookalikes,” with supermarkets and fast moving consumer goods challengers facing heightened risk when adopting closely evocative get ups; with brand owners gaining momentum from the successful Thatcher’s appeal as referred in our Insight: Combatting Lookalikes Revisited - clouds lift for brand owners as Thatchers wins its appeal over Aldi copycat cider. In particular, we anticipate more assertive use of combined trade mark, passing off and design right strategies to target the cumulative impression of packaging and point of sale presentation which strays too close.
The use of AI to create lookalike websites will also be something to watch out for – generative AI and its ability to create at speed increases the volume of potentially infringing content; although conversely AI-enabled monitoring and image similarity tools will only continue to improve and assist with detection.
Packaging - the UK’s new Extended Producer Responsibility (EPR)
The deadline for reporting data in relation to packaging for both small and large producers is 1 April 2026. All producers must submit data on packaging activity, packaging class, and packaging material and weight. Large producers must also report packaging type data, nation data (where applicable), and data relating to plastic and paper carrier bags. This report should include data for January to December 2025 and be reported using the Government reporting service.
If you would like to read more in relation to the EPR regime, you can read Rachel Warren and Rachael Davidson’s Insight here: Cost, compliance and consequence – The UK’s extended responsibility for packaging regime explained.
Payment Practices – new obligations following the late payment consultation
2026 is set to be a pivotal year for UK payment practices. Following the Government's late payment consultation (which closed in October 2025), businesses should prepare for substantial changes to how they pay suppliers, report on payment performance, and manage contractual payment terms. For more information on these key developments please see our insight.
Product Liability - Law Commission Review
The Law Commission has launched a review on the UK’s product liability framework, assessing whether the current framework for civil liability of defective products in the UK is fit for purpose, especially in relation to recent developments in digital technologies such as artificial intelligence (AI). This follows the European Union’s update to its policies, with Directive 2024/2853 coming into force on 9 December 2024.
The current framework is based on the Consumer Protection Act 1987 (the Act). It perhaps goes without saying that, since then, the products that consumers purchase and the way they are produced and used has changed drastically since, particularly in terms of technological advancements including the emergence of digital technology such as online platforms and smart devices which, of late, further integrate AI to their systems. Accordingly, products can now “evolve” in a manner that was unlikely to have been contemplated at the time of the Act.
This concern is reflected in the Terms of Reference of the Review, which outline its scope and considerations, querying whether the definition of “product” requires updating to account for emerging technologies. Similarly, the review will also consider whether the definition of ‘producer’ needs to be reformed for these developments. The review also recognises developing issues facing claimants due to technological advances under the Act, including whether the current longstop date for bringing a claim should be extended from ten years of the product being supplied, noting that a product may change significantly in and beyond that period owing to iterative software updates.
It is clear from these Terms of Reference that the UK is following in the EU’s footsteps of updating product liability in line with technological advancements. The public consultation in relation to this is planned for the second half of 2026 and guidance is likely to follow.
Having spent much of 2025 focussing on residential leasehold reforms, the government is expected in 2026 to focus on commercial property reforms which have been speculated about but not progressed as far to date. Potential impact will be on investors, landlords, tenants and developers across various commercial sectors. Please see our Insight: UK Real Estate Sector: 2026 and Beyond.
Supply chain resilience
Disruptions are likely to remain a structural characteristic of supply chains with continued shocks from geopolitics, climate, and insolvency. We expect operating models to extend beyond “routes to market”, incorporating provision such as dual/multi-sourcing; strategic inventory such as consignment/safety stock; performance regimes including service level agreements, service credits and liquidated damages; and step-in rights. We expect contracts to embed visibility (forecasting, reporting, audit) and provide expedited termination and transition mechanisms to protect continuity.
Sustainability and ESG
We expect ESG reporting frameworks to move from policy statements towards verifiable evidence and mandatory due diligence. We anticipate litigation over green claims and human-rights exposure; purely contractual covenants will be insufficient. Parties will look to embed policies, KPIs, verification, and termination/suspension for ESG breaches directly into supply terms.
Global uncertainty and trade fragmentation
De-risking, sanctions, and border measures are likely to rewire sourcing and raise competition questions when competitors collaborate for resilience. We anticipate that stockpiling of critical inputs (including food) will grow. We expect tighter customs scrutiny and “market-access via compliance,” requiring provenance evidence and change-in-law mechanisms to allocate risk. A key issue will be the extent to which market-access via compliance reshapes sourcing strategies.
AI in the supply chain
We expect AI to enhance monitoring and optimisation of supply chains - screening suppliers, detecting anomalies, and accelerating contracting. The challenge for the sector is the slow adoption of AI caused by the tension between its cost and how best to harness the wealth of data and capability it generates. The legal focus will centre on governance for training data and export controls, model risk management, auditability, and allocation of liability for automated decisions. We anticipate procurement will require explainability, data-provenance reps, and human-in-the-loop safeguards.
Conclusion
In this Insight, we have highlighted a selection of the wide-ranging challenges and opportunities that the Retail sector will face in 2026. Despite the headwinds, the sector has proved agile and consumer-centric, and we are cautiously optimistic about the 2026 outlook. We stand ready to support our Retail clients - established and emerging - to deliver their strategic goals in 2026 and beyond.
