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July 9, 2021

Direct To Consumer in Apparel: Regulatory Trends

Direct-to-consumer (DTC) models will help brands to maintain their brand exclusivity and also stall the growth of counterfeit products in the market.

By GlobalData Thematic Research

Brands are creating their own direct to consumer (DTC) platforms and stores to get closer to consumer and leveraging on digital channel for the purpose, unlike the traditional retail custom. The approach also enables brands to collect valuable customer shopping data which can be used to create curated products, services, product suggestions and targeted promotions.

Regulatory Trends

Listed below are the key regulatory trends impacting the direct to consumer theme, as identified by GlobalData.

Data privacy and DTC

Introduced in May 2018, the General Data Protection Regulation (GDPR) aims to protect and empower Europe Union (EU) citizens’ data privacy and protection. GDPR forces companies to hold sensitive personal information for the shortest time possible and allows EU citizens to demand insight into what information companies have about them and whether it is being shared with third parties.

As ecommerce companies collect large amounts of personal data, they must ensure that they are compliant with GDPR or risk significant financial penalties. Since GDPR was passed, other countries have moved to implement similar rules. The US is likely to adopt a federal law on data protection very soon, after the state of California enacted the Consumer Privacy Act (CPA). Faced with the prospect of strict regulation, US tech companies are pre-emptively supporting federal legislation that would overrule the CPA.

The ePrivacy Regulation, drafted in 2017, is intended to replace the existing ePrivacy Directive and to accompany GDPR. It extends the concept of personal data to include cookie IDs, internet protocol (IP) addresses, and even location data, meaning tracking and targeting technologies will be subject to data protection legislation. Intense lobbying is expected from tech firms, including ecommerce companies, until the law comes into force.

As DTC retailers store extensive customer data, they are obliged to adhere to data privacy guidelines and will be severely scrutinised in the event of non-compilation with any guidelines.

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This is an edited extract from the Direct To Consumer – Thematic Research report produced by GlobalData Thematic Research.