Like most other industries, the retail business has had its ups and downs during the last two years due to the turbulence induced by the Covid-19 pandemic. Being a retailer in the twenty-first century has become more complex, and is no longer only about consumer relations and pricing due to the increase of cross-border trade, changing import and export restrictions, counterfeit products creation, and fraud. In these unprecedented times, it's hard to anticipate what will happen in the long run. We are aware that consumer demand for speed and convenience remains high. Consumer concerns about sustainability and trust, which were already developing before the pandemic, must also be addressed by retailers.
One thing that can be said for certain is that now is the time for retail businesses to use blockchain to handle all of the new normal's challenges and difficulties.
Fortunately, the new century has seen rapid advancements in retail technology, allowing the industry to design its own solutions. Blockchain technology is one of them and may be used to a variety of challenges that retailers are now facing.
Before delving into the myriad of benefits offered by blockchain technology, a brief introduction to blockchain might be helpful. Blockchain is essentially a distributed database that can be accessed by a network of computers (distributed ledger). A record becomes immutable once it is added to the block (ledger). The network nodes check for the newest version of the blockchain on a regular basis to verify that all copies of the database are identical. The focus of blockchain is on decentralized peer-to-peer transactions (currency or digital assets) that are not controlled by a single centralized body. The database is transparent, and it keeps a comprehensive history of all transactions. Blockchains are protected by complicated cryptographic protocols and may only be accessed via public and private keys. The retail industry stands to gain five key benefits from blockchain technology, which are - Cost-efficiency, Faster Payments, Transparency, sustainability, and Security.
In the retail industry, consumer trust is crucial, but it is also easily shattered. Blockchain can be utilized to improve transparency and confidence in a variety of business operations, allowing merchants, payment gateways, and customers to build trust. Greater trust can only benefit the retail business as the number of online customer transactions grows.
Because of blockchain's ability to track, trace, and authenticate products, record contracts, ensure the flow of information, and record transactions, it can be used across the entire value chain, with savings, increased trust and transparency, and safer and higher-quality products and other benefits being passed on to consumers. The uses of blockchain for monitoring where items originate from, whether they're genuine, and in what condition they're in are evident. Temperature data from perishable commodities, for example, can be recorded on a secure digital ledger using Internet of Things-enabled sensors. If a product is proven to be faulty, a blockchain history allows a company to trace the product back through the supply chain, identifying potentially tainted suppliers, manufacturers, and batches. Retailers can simply recall items and correct supply chain concerns thanks to this technology.
The decentralized nature of transaction automation and the interoperability of apps in blockchain lead to the administration being eliminated. Faster payments are also made possible by blockchains, which do not require a centralized infrastructure.
Although no system is impervious to external security breaches, the distributed structure of blockchain enables an unparalleled degree of trust. Transparency is provided through blockchain's immutability and public availability.
Fraud is estimated to cost the global economy $5.38 trillion every year. The advantages of an incorruptible digital record of information are clear in this situation. Companies can post invoices on the blockchain to guarantee they don't change hands between supplier and buyer, for example, to prevent procurement fraud. The fact that all parties involved in a transaction must verify it helps to reduce fraud.
More organizations are investing in building or strengthening their loyalty programs in today's highly competitive and increasingly customer-centric economy. Blockchain can assist in a variety of ways.
The acquisition of client data, which poses security problems, is a key driver of loyalty programs. Smart contracts, which are put onto a blockchain and automatically executed when specific circumstances are met, can help secure client data by trading digital tokens for incentives rather than data. Smart contracts enable to improve efficiency and security, save costs by automating operations, and eliminate the need for centralized administration of the redemption process. Companies that manage loyalty programs build their own digital rewards currency to make accumulating and redeeming points across partners easier. Increased consumer involvement may be achieved by increasing flexibility and removing usual loyalty program constraints in this way.
In the retail business, inventory management is crucial. Through blockchain, inventory costs are reduced, order fulfillment and customer satisfaction are improved, supply chain management is simplified, forecasting and profit margins are improved, and so on. Giving assets like inventory units, orders, bills of lading – as well as the supply chain actors that interact with those assets – individual blockchain identifiers provide immutable insight into every stage of the supply chain. Moreover, since blockchain eliminates the requirement for authentication overheads, it has the potential to reduce the cost of financial services infrastructure. Furthermore, blockchain technology has a wide range of possible applications in payment systems, including the transfer of digital and physical assets, intellectual property protection, and automated contracts.
Retailers and consumer goods corporations all over the world have been increasingly committing to becoming more sustainable.
Global sustainable and environmentally responsible investment has increased by 68 percent since 2014 and currently exceeds $30 trillion. Consumers consider ethically produced items to be sustainable, and they are eager to put their money behind their beliefs. Adopting blockchain is perhaps the best means to ensure sustainability and cost-efficiency in one go.
From sourcing and production to transportation and sale, blockchain enables a distributed record of all activities and transactions throughout a product's life cycle. The data is decentralized and accessible in real-time to everyone on the network. People in charge of production planning, channel allocation, demand forecasting, and replenishment — upstream in the supply chain — can see what customers are buying at any given time because of this openness. They can better plan production levels as a result, producing only the exact quantity of stock needed to meet demand and avoiding overproduction. Companies may use geographic data to ship items to areas where they're in great demand, reducing the risk of unsold stock remaining in stores only to wind up in a landfill or incinerator.
Sustainability has both environmental and social aspects. Consumers are becoming more conscious and paying attention to the labor practices of businesses and retailers.
Blockchain has the potential to promote more ethical labor practices and reduce exploitation of labor and forced labor.
According to the most recent statistics, 24.9 million individuals are forced to work. Blockchain has been hailed as a viable solution for documenting and verifying workforce compliance across the supply chain, providing immutable proof that authorities can audit.
Blockchain uses in the retail business are numerous, whether it's to increase consumer trust and loyalty or to eliminate time-consuming administrative tasks. It allows for faster, more reliable, and consistent agreement between parties. In an industry where these processes are critical, blockchain is also making it easy to preserve correct records and manage inventories. Businesses of all sizes may benefit from the trust, transparency, and transaction efficiency that blockchain provides to the retail industry as the technology evolves.