Compliance is a primary consideration for retailers in every sector. From protecting the privacy of customers’ personal information to ensuring financial data is managed and reported correctly, companies must navigate a regulatory landscape that is constantly shifting to respond to new threats and needs. As different countries roll out their own laws to stay ahead of the issues, sellers must know the best ways to keep pace with new legislation and how it will impact their operations.
But luxury brands have some unique challenges when it comes to compliance. Along with following the regulations and mandates across every region where they maintain a presence, retailers selling at this level must also be aware of fiscal compliance requirements that often aren’t a concern for other stores. This issue is paramount for apparel and accessories retailers. They have the largest global footprint, with an average presence in 26 countries. Each country in which a retailer does business adds an additional layer of complexity.
Technology is available to help high-end brands address regulatory issues and comply with tracking, reporting and other mandates, but finding the right solution calls for a deeper understanding of the compliance landscape. Retailers must ask themselves how technology can help them identify the proper tax regulations. Then they must consider how they can achieve compliance and improve the customer experience.
Numerous regions have enacted data privacy regulations. From the General Data Protection Regulation (GDPR) in the EU to the California Consumer Privacy Act (CCPA), there’s a mish-mash of consumer privacy laws across the globe, and brands must be sure they’re in compliance wherever they conduct business. And these rules don’t apply just to online transactions; data collected within the store must also be managed in accordance with the regulations. Given the complexity of the data privacy landscape today, legacy systems and processes aren’t always up to the task of complying with the latest laws. A best-in-breed technology platform will help luxury retailers and their sales associates maintain alignment with the evolving disclosure requirements and other privacy rules in their areas of operation.
A month after the 2018 GDPR compliance deadline, research showed that 68% of respondents had spent more than six figures already on GDPR compliance and that 67% expected to spend an additional six figures by the end of 2018.
The emergence of digital wallets and the increasing use of mobile devices for payments are among the nuances driving retailers to seek out systems that can securely process multiple payment methods, while maintaining compliance with Payment Card Industry (PCI) and other payment regulations that exist in different areas. This becomes a larger issue for organizations in the luxury sector because elite buyers often travel widely, visiting their favorite brand’s stores across several regions. Along with more traditional single-purchase credit card transactions, the customers buying luxury goods sometimes prefer to leverage monthly invoicing and other non-standard payment arrangements. Sellers need to have technology available — beyond a simple POS system — to help them manage the complex compliance issues that surround the processing of each payment type.
Accurate tax calculations: At the point of sale, whether it’s in-store or online, the systems that underpin a luxury retailer’s transaction processes must be able to identify where the purchase is being made and where the products will be delivered to the customer. Shoppers may want to take the item with them from the store, or they might prefer to have their purchases shipped to their residence in their home country, a vacation property in a different region, or to a hotel or other destination. In some countries, particularly where tax jurisdictions overlap and multiple rates must be applied to a single purchase, tax calculation can be a real challenge. Ensuring the accuracy of taxes charged to customers requires a top-level technology solution that maintains up-to-date tax rate data.
Tax reporting: U.S. founding father Benjamin Franklin once wrote, “In this world, nothing can be said to be certain, except death and taxes.” While taxes affect all luxury brands, calculating them accurately is just the beginning. A number of countries now require that taxes captured on purchases be documented and reported using very specific data sets and formats. For example, Spain and Brazil have already implemented real-time VAT reporting regulations. Italy has launched its own set of electronic invoicing requirements. These fiscal mandates are largely focused on the growing effort to fight money laundering, tax evasion and similar activities.
Companies selling average-priced goods rarely bump up against the need to consider these types of regulations, but brands that focus on large-ticket items — or where just a few products purchased together could result in a high total dollar value — need to be ready to comply with the laws on each transaction and work with local authorities to provide any requested data, either as part of a proactive reporting schedule or on request if a transaction or customer account is flagged for review. Technology becomes imperative in following each region’s fiscal compliance laws, as well as compiling the necessary information into the mandated formats.
In the Luxury Universe: Focus on Global Proximity, Service and Selling Ceremony