How can Blockchain affect the Retail and Consumer brand sector?

February 12, 2017

The Retail industry is a globally connected network of suppliers, brands, retailers and customers – interacting in both physical stores and with digital online channels.

Retail, per-se, is a very simple concept – you buy a product and sell it on to your customer, but the complexities of this on a global volume scale are significant.

Does this make the Retail industry an ideal beneficiary for the Blockchain revolution?

I believe the complexity and competition in our industry makes us the ideal candidate for Blockchain technologies. There are many articles on Blockchain on other websites, so I will just focus on the Retail sector.

Customers and customer satisfaction is key to any successful retailer – they are more aware and informed than they have ever been, and they demand high quality products and fast service. This heightened customer expectation, makes the retail value chain ever more challenged, this together with the network of global competitors selling in every country, exacerbate the challenges.

Here are a few areas where Blockchain will add value to the retailer and/or customer:

1.      Trust and transparency

Trust in retail is at an all-time low, especially with online shopping. Retailers have taken years to earn trust from their customers, and the online world has led to more and more issues surrounding trust for the retailers.

A PWC survey suggests that 66% of consumers worry about data protection when shopping online and this is stronger in the millennials with almost all (93%) said that they do not fully trust retailers with their data. Trusting a retailer to provide transparency in pricing and product details is therefore key.

Transparency is of increasing importance to consumers and helping brands provide that transparency by tracing the origins and histories of products in key. For example, customers could trace the seafood they eat from boat to plate. Or, verify that the wool sweater they just bought came from sheep that are humanely treated.

Blockchain supports this transparency, allowing all parties—supplier, manufacturer, retailer and end consumer—to trace a product’s journey.

2.      Payments

Payment has always been a challenge for retailers form the recording of cash, giving credit, introducing credit cards to electronic payments, electronic wallets and now new currencies online. The current situation is complex with intermediaries (banks and card companies) charging fees for retailers to use the payments services.

Blockchain offers promise in this area, with a shared ledger where all financial transactions are recorded, eliminating the errors that can occur when each party participating in a transaction maintains its own data set for that transaction

Blockchain allows retailers to bypass the fees of the intermediaries. The current obvious contender is Bitcoin which offers all the benefits of a currency but without transaction fees and reconciliation issues.

Deloitte has carried out a trial to take Blockchain further – the trail involved making payments, which were facilitated via a contactless payment card connected to a blockchain based system. Created and developed by UK blockchain startup SETL, the trial showcased how blockchain technology could come to be integrated into the retail shopping experience – without altering the payment habits of consumers.

For the trial, customer funds were deposited in a Metro Bank client account, issued to individual accounts on the SETL blockchain and tied to user identities created and verified on Deloitte’s own blockchain ID system, formally unveiled earlier this month.

Payments were instantly processed, and the customer and merchant balances updated in real time. Many more payment trials are happening using various blockchain technologies

3.      Provenance – Product sourcing/tracking

The internet has opened the consumers’ minds to data and information about the products they are purchasing. Customers are increasingly likely to ask where the products are form and what the ingredients are.

This is no different to the early days of physical retail in the 1920’s in the UK. My family were the bacon suppliers for the south London area, and all the retailers we supplied, were given the information relating to the farms of origin. These details were passed onto the customers in store as they were shopping in store

This is where we introduce, provenance which seeks to record every last movement which happens in the global retail supply chain on the blockchain, and make all of that data searchable in real time for customers.

The ultimate goal for this application of blockchain technology is to be able to track everything that happened to the raw ingredient, packaging and manufacturing to make the product that the customer is purchasing

Imagine scanning a QR code on a tin of tuna in the supermarket and knowing exactly where the fish was caught, who certified it, where it was canned, etc., all timestamped at each step – this is powerful information for the customers and something they are demanding in ever increasing numbers.

Walmart is trailing the blockchain technology for its US food supply chain. Like most retailers, Walmart struggles to identify and remove food that has been recalled. When a customer becomes ill, it can take days to identify the product, shipment and vendor.

With blockchain technology, Walmart will be able to obtain crucial data from a single receipt, including suppliers, details on how and where food was grown and who inspected it. The database extends information from the pallet to the individual package.

These are just three applications for the Retail world – join me for more over the next few weeks