How will blockchain affect retail in coming years? A new report from Deloitte, New Tech on the Block, planning for blockchain in the retail and consumer packaged goods industries, looks in detail at how retailers can prepare for the advent of this technology. We have a look at how blockchain is developing in the industry.
What blockchain might mean for the industry
Blockchain, says Steve Larke, technology consulting partner at Deloitte, in his introduction to Deloitte’s New Tech on the Block report, “has the potential to transform the way that individuals and organisations interact, the way that businesses collaborate with one another, the transparency of processes and data, and, ultimately, the productivity and sustainability of our economy.”
The technology itself is a distributed digital ledger built on cryptography that can be used to record and share information, transactions and contracts securely and is maintained by a peer-to-peer community. In retail, it can be used to track and track products, record transactions and ensure that information is available to those that need it. It underpins, says Deloitte, a future of personalised transactions and on-demand services.
Larke adds: “As the technology evolves and new use-cases emerge, the retail and consumer packaged good industries are well placed to take advantage of the opportunities that blockchain affords.”
The effect on retailers and brands
Examples of blockchain in retail are few and far between as yet. The INS Ecosystem, currently under development, proposes to uses blockchain to sell goods directly to customers in a way that it envisages will offer better prices to the end customer, while using independent fulfilment to enable manufacturers to deliver directly to, and get feedback from, the end customer. So far it says seven of the top 20 FMCG manufacturers have confirmed their interest in taking part, while it has also partnered with logistics company Post NL as it looks to roll out in the Netherlands this year. Here’s a YouTube video of about the service.
Deloitte suggests use-cases for blockchain in consumer loyalty programmes, consumer engagement, tagging and finding stolen goods, connecting services, recalling goods and in the sharing economy. It points to the potential role of blockchain in connecting the supply chain, proving authenticity and in delivery as well as in preventing fraudulent transactions through an escrow system. It could also be used in payments and in digital advertising, as well as to protect the consumer.
A recent example came with the launch of UK mobile payments platform Nuggets, which is built on blockchain and is currently being tested by a small group of users with the promise that they will not have to share their personal data in order to make a payment.
How to prepare for blockchain
It’s early days yet for blockchain in retail but Deloitte advises preparing now by trialling low-value projects, exploring opportunities, taking a wait-and-see approach, and planning for the future. It suggests that retailers and brands should be at least exploring opportunities at the moment and predicts that blockchain will reach a tipping point in the next five years as it moves from a fringe technology to standard operational technology in the financial, manufacturing and consumer industries. Seamless experiences will bring together both on-chain and off-chain solutions.
But, it adds, it’s important to use the technology in ways that meet business needs and adds value – rather than for its own sake. “It is worth remembering that while blockchain provides huge operational upsides, businesses will not be the only beneficiaries of this transformational technology,” say authors Bryn Walton, insights manager, retail and consumer packaged goods, and Ben Perkins, director, consumer and industry products, both at Deloitte. “The ultimate beneficiary will be the consumer. If blockchain can create efficiencies and save costs throughout the supply-chain, these benefits can be passed on to the consumer in the form of lower prices. If blockchain provides more transparency across the supply chain, these benefits can also be passed on to the consumer in the form of safer products and higher quality.”
Image courtesy of Max Pistol. Used under a Creative Commons Licence.