Business & Technology
EU AI labelling rules pose retail risk for UK firms
Photoroom has warned that new European Union rules will require businesses to label AI-generated content or face fines, affecting online retail and digital image workflows.
The changes stem from Article 50 of the EU AI Act, which requires AI-generated or manipulated content to be clearly identifiable. The measure introduces mandatory disclosure rules for synthetic visuals and other altered content used in commercial settings, with penalties of up to £13 million or 3% of global turnover for non-compliance.
This creates a new compliance issue for UK businesses trading across European markets. While AI use has spread quickly across British business and consumer settings, the UK does not yet have an equivalent mandatory labelling regime for AI-generated material, creating a gap between domestic practice and EU obligations.
Photoroom, which offers AI-based photo-editing tools, said the issue is becoming more urgent as AI-generated images become more common in marketplaces and eCommerce. The company has more than 300 million users worldwide and processes more than seven billion images a year.
Research it cited suggests the broader shift is already well advanced. McKinsey data shows that 88% of organisations now use AI in at least one business function, while Ofcom reported that 31% of UK adults have used generative AI tools, up from 23% a year earlier.
Use has also risen sharply on consumer platforms. ChatGPT recorded 1.8 billion UK visits in the first eight months of 2025, according to figures referenced by Photoroom, underlining how quickly generative AI tools have become part of routine use.
Retail impact
The practical challenge for retailers and marketplaces is deciding how to distinguish between ordinary image enhancement and content that could be classed as synthetic or manipulated. Product photography has long involved some editing, but AI tools now make it easier to alter backgrounds, lighting, shadows and entire scenes, raising questions about when an image shifts from polished to potentially misleading.
Businesses selling across the EU may therefore need to review how product images are created, stored and presented to customers. Visible labels and technical markers are among the disclosure methods expected under the new framework, meaning compliance will extend beyond legal teams to marketing, eCommerce operations and digital production systems.
For platforms handling large volumes of listings, the burden could be significant. Companies using AI-generated product imagery at scale may need systems to track whether images are fully synthetic, substantially altered or only lightly edited, especially when those images influence buying decisions.
Matt Rouif, Chief Executive of Photoroom, said the rules mark a broader shift in how AI content will be treated in business. “As adoption accelerates, the challenge is no longer whether businesses use AI, but how transparent they are about it, with increasing pressure to clearly distinguish between real, enhanced and synthetic content,” he said.
The issue carries commercial as well as legal consequences. Online shoppers already rely heavily on product images to judge quality, fit and authenticity, and stricter disclosure standards could push sellers to be more explicit about how visuals were created.
Operational shift
Businesses will need to rethink how AI-generated visuals are produced, tracked and presented, according to Photoroom. That could mean changes to internal approval processes, metadata handling, marketplace policies and customer-facing disclosures, particularly for companies with cross-border operations.
Photoroom said it supports brands and marketplaces in producing consistent product imagery, and that clearer labelling rules will bring greater scrutiny to those workflows. For many businesses, the compliance task is likely to involve balancing the speed and cost savings of AI tools against the risk of regulatory penalties and customer mistrust.
Rouif said transparency is moving to the centre of the debate around AI-generated visuals. “This introduces enforceable transparency requirements for the first time, creating material legal and operational risk for businesses using AI at scale,” he said.
The Original Factory Shop which sells discounted homewares, furniture, electrical goods and toys, shut its store in Carterton yesterday (Saturday, March 28).
On the business’ Facebook page, last-minute discounts were being offered with clothing down to £2 an item.
READ MORE: Store closure fears as UK discount brand in administration
On Thursday, March 26, a spokesperson for the store said: “Everything in store is now up to 85 per cent off as we prepare to close our doors this weekend.
“This is your last chance to grab a bargain – once it’s gone, it’s gone.”
Following that announcement, prices were subsequently lowered and lowered.
Other branches around the UK also shut yesterday including in Cromer, Gorleston and Bungay in Norfolk and Suffolk with major sales also being implemented at other locations.
This comes after the business fell into administration in January, with further closures also expected imminently in Snettisham, according to The Sun, and around the country.
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Administrators said The Original Factory Shop’s troubles have been driven by challenging trading conditions, linked to high-cost inflation, fragile consumer confidence and rising labour costs caused by government policies.
Problems were then exacerbated by issues linked to its third-party warehouse and logistics operator, weakening sales further.
It only has one store in Oxfordshire, its Carterton shop, although Claire’s – which is also owned by investment firm Modella Capital and is in administration – has one in the Oxford Westgate shopping centre.
The fashion retailer this month closed down its store in the Oxford city centre shopping centre having opened in October 2017 as part of the £440m revamp.
It was one of the original retailers as part of the shopping centre’s new phase of life, along with John Lewis, Primark and Next.
A spokeswoman from Hugo Boss said: “Hugo Boss optimises its global store portfolio as part of its long-term strategy, which also affects the Boss Oxford Westgate Centre store.
“Hugo Boss will maintain a strong presence in the UK, and we will also continue to serve our customers via our online flagship store at hugoboss.com.”
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The company did not say whether any redundancies had been made from closing the store.
The spokeswoman said: “Wherever possible, we reallocate employees through transfers or other internal opportunities.”
There are indeed other branches not too far, including at Bicester Village, Swindon and Reading.
A spokeswoman for the Westgate said: “We remain committed to making Westgate Oxford a vibrant and varied retail destination for our guests, welcoming exciting new arrivals such as Sephora, The Beefy Boys, and the opening of Lego later this spring, as well as recently upsized stores for Oliver Bonas, Goldsmiths, and Superdrug.
“We look forward to sharing more details about new brands joining the centre soon.”
Henley Business Buzz hosted its first event at Henley Rugby Club, drawing more than 30 businesses and decision-makers from the local area.
The group is part of the wider Business Buzz network, offering informal, no-membership, pay-as-you-go networking that focuses on building professional relationships in a relaxed setting.
Orinta Gaucyte, host of Henley Business Buzz, said: “It was fantastic to see so many local businesses come together for our first Henley Buzz.
“There’s something really special about building a supportive community where people feel comfortable, included and able to make genuine connections.
“A huge thank you to everyone who came along and helped make the launch such a success.”
The launch was attended by Business Buzz co-founders Katrina Sargent and Simon George, who officially opened the event.
The Henley meetings are supported by sponsors Logic Financial Services and Logic Mortgages.
Lee Humphrey, of Logic Financial Services, said: “It’s brilliant to see an event like Business Buzz arrive in Henley.
“Creating opportunities for local businesses to connect in a relaxed and approachable way is incredibly valuable for the town, and we’re proud to support something that brings the business community closer together.”
Henley Business Buzz will take place on the fourth Thursday of each month, with the next event scheduled for Thursday, April 23.
All businesses, entrepreneurs, and professionals in the area are welcome to attend.
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