How blockchain is transforming into a major game changer for retail

– By Rama Krishna Sreepada

Blockchain technology has been extensively tested and implemented by organizations moving towards becoming digital first, but many brick-and-mortar retailers are still lagging behind in recognizing its potential. According to a Deloitte study, internet interactions influence more than half of every dollar spent at retail locations, generating price transparency, convenience and relevance expectations. The technology makes it possible to track supplies in real time through all stages of the supply chain and records all data on a decentralized ledger for greater traceability.

After the pandemic, retailers had to struggle through significant challenges with provenance and keeping track of the supply chain. To meet such challenges, the sector’s wider use of technology in its legacy systems can provide the ultimate digitization it requires. The reliability, sustainability and quality of tracking and assistance in administrative procedures of blockchain can give the retail sectors the ultimate digitization they need. Thus, retail is now focusing on the blockchain more seriously and has started to integrate it into its legacy systems.

Blockchain has the potential to change data ownership. It helps restore data control to the user by allowing them to control the availability of their information online. It represents a fundamental shift in the handling of data and gives users much-needed authority over their information. This change is necessary for various security and privacy reasons.

Maintain product quality and improve traceability

Blockchain has clear implications for tracking where goods come from, whether they are legitimate and how good their condition is. For example, temperature data from perishable goods can be recorded on a secure digital ledger using Internet of Things-enabled sensors. Suppose a product is proven to be defective. If so, a blockchain history allows a company to trace it back through its supply chain, identifying suppliers, manufacturers and batches that may have been tainted. Blockchain technology allows retailers to recall products and address supply chain issues. Smart-tags are a perfect example that track a product’s location in near real-time and create an efficient blockchain-based tracking system.

Handling of consumer data

Blockchain technology has transformed the ownership of data. It allows users to know who has access to their data online. As organizations become digitally evolved, it becomes important for them to handle consumer data more responsibly. Consumers won’t even realize when they allow these organizations to use theirs across applications. As more organizations become digitally evolved, it opens up more data collection points. Websites and applications are first-hand collectors of users’ data. To face such consequences, retailers do not integrate blockchain that works using a decentralized ledger system. In contrast to traditional systems, the collected data is stored in decentralized ledgers that remove intermediaries. This gives full control to users and allows them to decide who can access their data, transactions and behavior patterns. As a result, it drives transparency and authenticity and improves the consumer experience.

Improve loyalty programs

Retail organizations can use blockchain to build a decentralized system where loyalty points can be used across a variety of brands and retail categories. With blockchain in retail, all loyalty network members, including companies, loyalty program administrators and customers, can communicate securely while maintaining anonymity.

A fundamental driver of loyalty programs is the collection of customer data, which creates security risks. Loyalty program operators, in turn, establish their own digital reward currency to facilitate points accumulation and redemption among partner organizations. In this sense, increased flexibility and the removal of standard loyalty program restrictions can lead to increased client involvement. In today’s highly competitive and increasingly customer-centric industry, more companies are investing in developing or strengthening loyalty programs, and blockchain is helping in various ways.

Combating fraud and counterfeiting

Counterfeiting has a particularly devastating impact in retail, resulting in product recalls, damage to brand reputation, a decline in customer confidence and, ultimately, significant financial losses. Significantly, counterfeiting can mean a life-and-death situation for today’s organizations. Retailers can ensure product authenticity for blockchain-tracked products because counterfeit goods lack this verification history. Of course, for blockchain to serve this purpose, the integrity of the information entered into the ledger must be ensured. Businesses can put invoices on the blockchain to ensure they do not change hands between supplier and buyer to prevent procurement fraud. That all parties must verify transactions also helps to reduce fraud. Regulatory organizations now recognize blockchain’s ability to authenticate product provenance.

More efficient payment systems

Retailers who do not accept cryptocurrencies will benefit from changing payment methods now that the mainstream has officially adopted them. However, blockchain has payment implications that extend beyond cryptocurrencies. Because it eliminates the requirement for authentication costs, it can potentially reduce infrastructure costs for financial services. Moreover, blockchain technology can benefit from various possible applications in payment systems, such as the transfer of digital and physical assets, protection of intellectual property and automated contracts.

Final thoughts

Blockchain’s applications in retail are many: to increase customer trust and loyalty or to eliminate labor-intensive administration. Due to blockchain’s ability to track, trace and authenticate products, it can be used across the entire value chain, with the benefits passed on to the consumer in terms of efficiency, increased trust and transparency, and more assured quality of products. In an industry where these processes are critical, blockchain finally makes it easy to keep accurate records and track inventory. Businesses of all sizes can benefit from the trust, transparency and transaction efficiency that blockchain brings to retail as the technology evolves.

(Rama Krishna Sreepada is co-founder and chief architect of [x]cube LABS)