In today’s world, data has become a crucial source of information for many businesses and organizations. Data shapes how businesses make decisions, improve their workflow, and understand their customers. Companies rely on data, and they must ensure that the data is accurate and has not been tampered with. This is where blockchain technology can help businesses.
Blockchain is often associated with cryptocurrencies, but its potential extends far beyond fintech. The technology promises transparency, security, and traceability — features that many industries could benefit from. Blockchain can be used in a wide range of industries, from healthcare to supply chain management.
In this blog, we will explain in simple terms the technology of blockchain, and its main features, and explore some blockchain applications in retail and fashion retail.
What is Blockchain Technology?
Blockchain technology is a digital distributed ledger system. It keeps track of events, data, and transactions in the form of blocks. Each block has a set number of transactions, and they get distributed to tons of different networks for verification. Every new block is linked “chained” to the previous block, hence the name “Blockchain.” Any transaction done on the blockchain gets added to the system and can’t be erased.
The nature and technology of blockchain produce a record of data that is unchangeable and end-to-end encrypted. The use of blockchain to store data can aid in the prevention of fraud and unauthorized activity.
Blockchain technology allows organizations to create transparent databases. Due to the immutable nature of the blockchain, the technology uses a distributed ledger. A distributed ledger allows multiple entities to view the same information while maintaining their ability to trust it.
Blockchain can record each step of an asset’s journey, guaranteeing that the data is accurate, and if something goes wrong, everything can be traced back to find the problem’s root cause.
The blockchain’s smart contract feature can enable automation, increasing efficiency and speeding up work processes. Smart contracts are self-executing documents that are stored on the blockchain and follow the terms of a contract or agreement. They would reduce the need for human intervention and reliance on third parties, resulting in fewer errors and mistakes.
Blockchain in Retail Market:
Blockchain has huge potential in the retail sector because of its transparency and tamper-proof nature. The benefits of blockchain in retail could be helping retailers by combating counterfeiting, protecting data, analyzing customer data, and increasing transparency in production.
- Supply Chain:
The main objectives of supply chain management are accuracy and efficiency. Through proper supply chain flow, products get to the right place within the right time frame while minimizing costs.
Blockchain’s transparency and tamper-proof technology could be beneficial for tracking supply chains. By using blockchain in retail, any retailer could learn when each event in the supply chain happened, who did it, where it took place, and all other details.
Fraud is a concern for supply chain management, as are mistakes that are associated with transactions. Using blockchain reduces intermediaries and would give the retailer a thorough record that would trace back the source of any fraud if it happened.
- Combating Counterfeit
Counterfeited products could lead to brand reputation damage, monetary loss, and a decrease in customers’ trust. Retailers could create digital signatures for products to verify their authenticity.
Digital signatures are stored on the blockchain; therefore, they cannot be modified, manipulated, or tampered with. Digital signatures also increase privacy and security, as they protect the data from unauthorized access.
- Protection of Data
Retailers could ensure the security of their data and transactions through blockchain. Blockchain’s technology acts as a shield from unauthorized access and hacking. Creating a digital signature would preserve the authenticity of data and protect it from unwanted tampering.
- Customer Data Analysis
Using blockchain in retail could benefit retailers with the technology’s immutable data and the ability to create detailed yet secured customer profiles. A customer profile could include their purchase history, reward points if a loyalty program is included, and all related information. By knowing the customer, the retailer can work on the customer’s pain points and improve his services.
Blockchain Use Cases in Retail:
Carrefour is the world’s eighth-largest retailer by revenue. The company operates a chain of hypermarkets, grocery stores, and convenience stores in over 30 countries.
To track its services, the company used blockchain development services. Carrefour utilizes blockchain to track 20 items, including chicken, meat, milk, and fruit production, from farm to store. The company added that they would add more products that customers wanted reassurance on. By using blockchain’s transparency, the company grew customer loyalty and trust.
Their systems work with a scannable QR code. The codes are attached to the product, and upon scanning, customers can learn detailed information about the product, including harvest date, cultivation location, if the product contains any pesticides, package data, and more.
After using blockchain in retail, Carrefour confirmed a noticeable sales increase in comparison to non-blockchain products.
Carrefour started using blockchain for food traceability in 2018, working alongside IBM. In 2021, the company included TEX brand clothing, and in 2022, it added Carrefour Bio products. The company stated that the reason for using blockchain is consumers’ growing desire for transparency.
Nestle started using blockchain technology in the supply chain in 2017. The company collaborated with OpenSC, an innovative blockchain development company that allows consumers to track their food back to the farm.
The initial pilot program traced milk from farms and producers in New Zealand to Nestle factories in the Middle East. Nestle gave consumers access to blockchain data as part of its promise of full transparency.
Later on, Nestle expanded blockchain usage and included its Zoégas coffee brand. In this project, Nestle partnered with the Rainforest Alliance, which provided their certification information and guaranteed the traceability of the coffee. The Rainforest Alliance is an international non-profit organization that works to protect forests and improve the livelihoods of farmers and forest communities.
Nestle used a QR code on the packaging as well. Consumers can follow the coffee journey from its growing location through roasting, grounding, and packaging. The data includes information about farmers, harvesting times, and transaction certification for shipments.
Another great example of blockchain applications in retail is De Beers. De Beers is one of the world’s biggest diamond retailers. It’s a British corporation that specializes in diamond mining, exploitation, retail, trading, and industrial diamond manufacturing sectors.
The company developed Tracr technology, a digital platform for tracing diamonds from the source, to trace where the diamonds were extracted and how they reached the store.
This level of transparency helps the company supervise the process, trust that the process is working in ethical conditions, and ensure the customers that their diamonds are original and certified.
In 2016, the Vice President of Food Safety at Walmart asked his team to trace a package of sliced mangoes to the source. Although all the data was in the system, it took the team almost 7 days to retrieve the information.
Walmart Canada delivers over 500,000 shipments annually to distributors around the country and relies on 70 intermediaries to deliver these products. Walmart used blockchain to solve the obstacles associated with logistics, transportation, and invoices.
In August 2017, Walmart announced its blockchain partnership with supply chain companies like Dole, Kroger, and Nestle to collaborate and find innovative ways to trace products and food. Walmart also partnered with IBM to create a food traceability system based on Hyperledger Fabric, which is an open-source collaborative effort by The Linux Foundation, created to advance cross-industry blockchain technologies. Walmart was able to trace the sliced mangoes using blockchain in 2.2 seconds.
Walmart Canada worked with DLT Labs and blockchain developers and shared their network, which became known as DL Freight in 2021. After using DL Freight, the number of disputed invoices dropped to 1%, which is 70 times less than before adoption.
In this video, Walmart shares how blockchain technology has helped them increase food security and guarantee authenticity.
Blockchain Applications in Fashion Retail
Matthew Williams founded Alyx in 2015, a luxurious clothing brand that earned him a place multiple times at Paris Fashion Week. Williams collaborated with Moncler, Nike, and Dior Men.
William’s partnership with Avery Dennison and Evrythng is an example of using blockchain in fashion retail. Some Alyx products come with hang tags that feature a scannable QR code that displays the product’s entire supply chain. The details include the location of the product’s manufacturing, the raw material’s country of origin, and its shipping information.
Avery Dennison would create tags with digital IDs for each product while Alyx’s suppliers entered all the information and necessary data. Evrythng would store and upload the data to the blockchain.
Some of the luxury brands owned by LVMH, a French multinational holding company that specializes in luxury products, include Louis Vuitton, Dior, Fendi, Givenchy, and Séphora. LVMH collaborated with Prada and Cartier to create the world’s first global luxury blockchain, Aura Blockchain.
The collaboration aimed to provide customers with a high level of transparency and traceability. Aura matches a product ID to a client ID, allowing customers to access a product’s history and proof of authenticity without relying on third parties.
Toni Belloni, LVMH Managing Director, stated that the blockchain allowed them to strengthen their connection with customers.
As we have already mentioned, data serves as the foundation for many business decisions, so being able to fully rely on it would be advantageous for businesses and organizations in a variety of ways. The use of blockchain in retail could be the key to the advancement of retail companies.
Blockchain has the potential to positively impact both the retail and fashion retail industries. Some of the benefits of blockchain in retail include security, transparency, and traceability.
The majority of blockchain applications in retail and fashion retail have been in the supply chain, but the technology’s potential remains enormous. The retail and fashion industries are on track to become more reliable, secure, and transparent by leveraging blockchain’s capabilities.