Retailers increasingly recognize blockchain’s transformative ability to streamline operations, ensure product authenticity and enable tighter supply chain collaboration. However, most are still working to fully understand how to harness its potential inside their four walls and beyond.
A first step is for retailers to educate themselves on the nature of blockchain technology and its value for retail operations. Blockchain could help retailers address a variety of pressing business issues, including the following:
- Improving inventory management. With the increasing complexity of SKU management and shorter product life cycles, sales forecasting has become more difficult for national fashion apparel retailers. These retailers and their supply chain partners could implement a blockchain solution that provides a single source of truth and uses smart contracts to enable the automatic execution of payments and orders. The improved supply chain visibility would increase operating efficiency and allow more accurate forecasts, preventing over-ordering and minimizing lost sales due to stock-outs.
- Ensuring product authenticity.The proliferation of forgeries that are difficult to identify can result in declining sales and a deterioration in the value of genuine products for designers of luxury consumer goods. A blockchain solution can renew trust by allowing customers to scan a code permanently etched into the product and access the entire history of the product, including the chain of ownership.
- Tracking provenance.Grocery retailers specializing in organic and GMO-free food products would benefit from the ability to shore up confidence among consumers suspicious that organic labels are just a marketing tool and strategy to charge higher prices. Supermarket chains and their supply chain partners could deploy a blockchain solution to raise confidence in their products by allowing customers to track the journey of a product from the farm to the store.
- Enhancing customer loyalty/rewards programs.More than $117 billion in consumer loyalty rewards are issued by U.S. businesses each year, and many companies today have expanded their programs to cover multiple brands in an effort to increase customer satisfaction while reducing their liability.8 Consumers struggle to track the many loyalty programs they are enrolled in, and many of the loyalty points created each year go unused, resulting in balance sheet liabilities. A blockchain application would allow users to easily redeem points across different merchants and platforms (e.g., iOS, Android and web), improving customer satisfaction and reducing liabilities, while also cutting operating costs and decreasing the potential for fraud.