“The death of the high street” was a much-touted headline even before pandemic restrictions and successive lockdowns led to a shift away from bricks and mortar stores. Aside from the obvious restructuring concerns, businesses have had to reconsider how the shift towards e-commerce, delivery services and even more innovative ways of redesigning the retail experience might affect intellectual property rights.
A driving force behind the shift has been the desire for convenience and retailers have responded with a variety of options. We can now enjoy groceries delivered to our door in under 30 minutes with a competitive market of ultra-fast delivery services, several of which have now become household names. If you prefer not to have to worry about selecting the right ingredients, you can order cook at home meal kits or even recreate a complete dining experience from your favourite restaurants.
So much so that surveys show that the number of users of food delivery services increased by 17% on average across 8 European countries.[1] To respond to this hike in demand, restaurants and delivery services have invested in ‘dark kitchens’, industrial spaces where take away meals can be prepared, often with multiple brands under one roof.
For those of us that still prefer to shop in store, fully contactless supermarkets now offer the ultimate social distancing grab and go.
Protecting IP rights in online services
One of the most popular means by which retailers seek to protect their brand is by registering a trade mark. Trade mark specifications are tailored to each applicant, seeking to protect the goods and services relevant to that business. They are usually applied for early in the life cycle of a company with a trade mark only needing to be renewed every 10 years.
With a lightning-fast move to online services, many retailers who had sought brand protection by registering trade marks for in-store retail services were left in uncertainty as they expanded beyond the scope of their trade mark protection by moving to provide online retail services. Retailers have been forced to consider amending their trade mark specifications where the goods for sale remain the same but the means of sale has evolved. This is particularly true of food retailers who may now provide almost exclusively takeaway services.
However, there is always an exception to the rule and bucking the trend, the previously exclusively online marketplace, Amazon, has opened brick and mortar stores across the capital. Already known for their one-click delivery service, Amazon's stores aim to provide the ultimate in convenience and contact-free shopping.
Employing their 'Just Walk Out' technology, customers scan a QR code available via the Amazon app to enter the stores and continue to select their items but without proceeding to a cashier or scanning them at a self-service point. Instead, machine learning and surveillance technologies track the items a consumer has pocketed and charges their account, issuing a receipt via email on exiting the store.
The self-sufficiency of this mode of shopping has allowed Amazon to slash operating costs by 96%[2] and with Tesco and Sainsburys offering their own contactless shopping experiences, we expect that many other retailers will follow suit. Whilst future use of cutting-edge technologies cannot always be foreseen, it is worth retailers giving thorough consideration to the likelihood of innovation in their businesses and how this can be protected in trade mark specifications.
NFTs and the Metaverse
What new technology subverts the traditional shopping experience more than the metaverse? Luxury brands like Balenciaga, Burberry and the fashion behemoth LVMH are all dipping their toes into the augmented reality of the metaverse to target the growing under 40s demographic which is set amount to 70% of the global luxury market by 2025.[3]
Brands have announced their intentions by filing trade mark applications seeking to cover NFTs (non-fungible tokens). NFTs are a form of unique digital ledger that can be bought, sold and used to represent ownership of a physical item.
Separately, fashion houses are protecting digital reproductions of their clothes to be worn by personalised avatars. With high profit margins on products wearable only in the metaverse, there is the potential to generate billions of Euros in sales for fashion houses.[4]
Such applications are not limited to luxury brands with apparel retailers like Urban Outfitters, Ralph Lauren and Abercrombie & Fitch indicating from recent filings their intention to enter the virtual world. However, the sale of NFT products is not necessarily divorced from tangible goods; Gap has commenced sales of NFTs of its iconic logo sweatshirts for which customers will receive a physical hoodie.[5]
Not solely to be a playground of the elite, Walmart, America's largest retailer has indicated its intention to create its own form of cryptocurrency and collection of NFTs to include electronics, homewares, toys and sporting goods, amongst others. Going one step further, it is thought that Walmart will offer consumers a virtual currency and it would not be surprising to see similar filings from other prominent retailers.[6]
Trialling Branding in Dark Kitchens
With IP protections secured, businesses have re-evaluated the cost-efficiency of launching new brands and settled on streamlining outlay costs.
'Dark kitchens', sometimes referred to as 'cloud kitchens' have become a buzzword within the last two years with unprecedented levels of interest shown from some of the capital's most in demand restaurants, including Dishoom and Rosa's Thai. In recent months, there have been a trio of new dark kitchen spaces opening across London and their popularity remains on the rise- Deliveroo alone runs 300 dark kitchens globally.[7]
Dark kitchens have become particularly popular with start-ups who have seized upon their potential to trial branding without the need to rent space for a dining room or pay waiting staff. Dark kitchens, often located in former industrial areas or, where based in London, under disused railway arches will have comparatively cheaper rents than shiny high street restaurant spaces.
Whilst the cost savings of launching a brand through a dark kitchen space might be attractive to businesses, it is worth considering potential reputational pitfalls and environmental concerns. The average urban express delivery generates 111.8g of CO2 which on scale produces millions of tonnes per year globally.[8] However, the housing of multiple brands within a single kitchen increases potential for sharing high energy appliances and can maximise drivers consolidating journeys thus offsetting carbon emissions.[9] When managed properly, dark kitchens have fundamentally shifted consumer habits and address consumer demand: quick restaurant quality food to their door. Opening a dialogue with local authorities before commencing operations can sidestep many issues to ensure that the appropriate planning permission is in place and adequate protections are in place for any residents who may be close by.
[1] https://www.ft.com/content/38def705-0de9-4438-8f3e-6e3c259051b8
[2] https://www.chargedretail.co.uk/2021/11/18/amazon-slashes-cost-of-just-walk-out-tech-by-96-paving-the-way-for-wider-roll-out/
[3] https://www.bloomberg.com/opinion/articles/2021-12-17/luxury-brands-from-rolex-to-gucci-see-billions-in-metaverse-avatar-nft-economy
[4] https://www.bloomberg.com/opinion/articles/2021-12-17/luxury-brands-from-rolex-to-gucci-see-billions-in-metaverse-avatar-nft-economy
[5] https://www.cnbc.com/2022/01/16/walmart-is-quietly-preparing-to-enter-the-metaverse.html
[6] https://www.cnbc.com/2022/01/16/walmart-is-quietly-preparing-to-enter-the-metaverse.html
[7] https://www.ft.com/content/38def705-0de9-4438-8f3e-6e3c259051b8
[8] https://www.ft.com/content/38def705-0de9-4438-8f3e-6e3c259051b8
[9] https://www.eastlondonlines.co.uk/2020/04/behind-your-dinner-deliveroos-dark-kitchens/
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