Blockchain’s biggest cheerleaders believe that the technology has the potential to transform countless industries on a global scale. But what does this mean for brick-and-mortar retailers?
There’s no doubt about blockchain’s growth prospects. The industry is projected to grow from a value of $20.1 billion in 2024 to $248.9 billion by 2029, representing a compound annual growth rate of 65.5%. This rapid scaling process will invariably deliver diverse use cases over the coming years, with retail stores set to improve operational efficiency.
But which areas of retail could be optimized with the help of blockchain technology? Let’s explore five reasons why blockchain will transform brick-and-mortar retail as we know it today:
1. Real-Time Inventory Visibility
In terms of inventory management, the implementation of blockchain can excel in providing real-time data insights regarding stock with the help of smart contracts.
By utilizing smart contracts, blockchains have the ability to provide automated inventory updates. The technology can record changes made to the blockchain in real time when a product is received, sold, or moved into different storage locations.
This next-generation data accuracy can become fully integrated using Internet of Things (IoT) devices like Radio Frequency Identification (RFID) tags and inventory tracking sensors that can record the movement of stock without any human input.
Blockchain inventory visibility can be an asset to retailers, who can automatically trigger stock replenishment orders based on levels recorded on the blockchain. This helps to prevent stockouts and the loss of revenue.
2. Payment Flexibility
Blockchain can also deliver greater payment flexibility for retail stores and is a crucial component for supporting open finance infrastructures.
As the technology that supports cryptocurrencies like Bitcoin, blockchains can help to leverage crypto payments in-store with the help of integrated point-of-sale systems, and can also support decentralized finance projects that involve peer-to-peer lending for more adaptable buy now pay later (BNPL) functionality.
This added flexibility will play into the hands of open finance, which is set to continue to grow the capabilities of consumers who will have the power to make the purchases that they want in their preferred manner.
3. Stronger Supply Chain Management
It’s also possible to utilize blockchain for unprecedented supply chain management. In terms of building trust and transparency, blockchain can provide ‘digital IDs’ to products that can keep their metadata secure throughout their lifecycle, from the point of manufacture to retail store shelves.
This helps to lower costs and improve the speed at which products can navigate supply chains. With the help of smart contracts, vendors can be paid instantly once goods are delivered, subject to quality checks. This helps to maintain strong relationships with suppliers for a frictionless supply chain experience.
Because smart contracts operate as on-chain agreements between parties, they can self-execute once conditions are met. This will introduce brand new levels of autonomy to supply chain management, building greater efficiency without becoming too time-consuming for all parties involved.
4. Next-Generation Loyalty Programs
In the world of marketing, high-performing loyalty programs have been found to generate a 15% to 25% revenue boost for users annually, and blockchain can pay dividends for brick-and-mortar stores seeking to implement a quality loyalty program for customers.
One of the biggest challenges that customers face revolves around keeping track of different loyalty schemes and accumulating points that can often remain unused.
Blockchain has the potential to change customer loyalty schemes in a fundamental way, and can help users earn and redeem points on a multichannel basis, reducing liabilities and improving the customer experience (CX).
The technology can also help to grow the quality of rewards that customers receive. With support for non-fungible tokens (NFTs), customers could use points to redeem NFTs that can act as digital keys to exclusive online content, special discount codes, or gamified shopping incentives in-store.
5. Fighting Back Against Counterfeits
Counterfeiting can be a severe problem throughout many areas of retail and could lead to product recalls, brand reputation damage, the loss of consumer trust, and hefty cash flow implications.
According to Corsearch estimates, counterfeit goods accounted for 3.3% of global trade in 2023, and this figure will climb to 5% by 2030. This means that $1 of every $20 spent on goods globally could soon be reserved for counterfeits.
Blockchain can counter the threat of counterfeiting by using its distributed digital ledger technology to bring reliable proof-of-origin data for products. As part of the supreme visibility that blockchains allow, retailers can monitor every part of their product line, from the extraction of raw materials to the shipment of products to consumers to check for discrepancies.
Optimizing Processes with Blockchain
Blockchain technology has the ability to drive the evolution of the retail industry, improving payments, supply chain management, and mitigating instances of counterfeiting in the process.
For retailers, the advantages of embracing blockchain earlier are clear in paving the way for greater consumer trust and positive automation in optimizing existing processes.
While the technology can still be a mysterious prospect for would-be adopters, it provides an essential edge in out-innovating rivals and building a sustainable, future-proofed operation. With this in mind, blockchain should be a pivotal consideration for all ambitious brick-and-mortar retailers today.
Read Also: How Blockchain Technology Can Streamline Global Supply Chain?