Blockchain is the shared infrastructure and distributed ledger technology that looks poised to shake up many industries, including the retail sector, in the coming years. Its ability to streamline operations and enable a more efficient supply chain positions it well to alter the retail industry as we know it. In fact, 87 per cent of retail decision-makers surveyed by Cognizant recently said they believe blockchain is important to the future of the retail industry.
However, most retail brands still find it challenging to understand how blockchain can transform business processes. This is due to the sometimes complex nature of the technology itself, as well as a general hesitancy to embark on the blockchain journey: from choosing a platform to understanding its retail applications.
Blockchain has already widely infiltrated industries such as banking and financial services, and retailers who do not take stock of this burgeoning technology will soon find themselves left behind.
Blockchain explained through retail
Given its ability to deliver low-cost and secure sharing of information and value, blockchain will be the next frontier in transforming the retail sector. This means it will become crucial for retailers to educate themselves on exactly how blockchain can help address various organisational pain points. Just one of the many use cases of blockchain can be described using a retail scenario: that of the sourcing and purchase of diamonds.
With environmentally-conscious customers increasingly demanding sustainably-sourced diamonds, there has been an increase in the demand for product authenticity. With blockchain, a diamond’s origin and the journey it takes to the consumer can be more transparent, given the improved traceability of the value chain. The secure and synchronised record of transactions, and the public verification of all this online data that blockchain provides, means that proof of compliance is always managed in highly secure, yet visible, ways.
This visibility of the origin of products is just one way that blockchain will aid in delivering better customer experiences, in addition to many operational benefits.
Exploring the benefits of blockchain
There are multiple operational and customer-facing benefits to using blockchain in the retail industry, which often has disparate data siloes, far-flung sales and partner ecosystems, and problems with accurate reporting of sales volumes. Here are some of the ways it will improve retail businesses:
- Supply chain transparency will be improved, particularly regarding sustainably-sourced products, including fish or organic consumables. Blockchain technology allows the transparent recording of compliance issues regarding such products, in addition to ensuring regulatory compliance across the supply chain. Such transparency will also be increasingly important to a discerning buying public.
- The public ledger that blockchain involves will reduce instances of counterfeit products and fraudulent transactions. All products are publicly registered on the blockchain, and should duplicates appear, it makes counterfeiting more easily identifiable than ever before. The encryption of transactions through blockchain also provides security to consumers against fraudulent transactions.
- Partner performance will become more efficient as ‘smart contracts’ automate the supplier/vendor contractual agreements. In fact, automation is an overarching benefit of blockchain that will see many manual processes become digitised, freeing up employees to focus on issues such as customer engagement.
Closing the talent gap
Retail organisations wishing to tap into the benefits of blockchain will need to develop additional skills and expertise in blockchain. In particular, technology skills such as cryptography, software engineering, and network infrastructure will be crucial to successfully integrating blockchain into an organisation.
Although retail is not an industry typically associated with highly-developed technology skills, it is undergoing a rapid perception shift. This is due to the digital transference of our shopping habits that will see the Australian ecommerce market worth an estimated $32 billion by the end of this year. Additionally, with the imminent arrival of international online behemoths such as Amazon on Australian shores, the need for technically-skilled workforces within retail will continue to increase.
Retailers should seek to use a mix of internal strategies, such as innovation labs and training, in addition to external strategies such as partnering with blockchain companies and new hires, to close the talent gap on blockchain.
The most successful retail businesses, alongside employing internal and external strategies, also need to understand that being nimble in these approaches will ensure they work. Taking an entrepreneurial approach to blockchain technology is vital to keep up with its fast-changing nature.
Being nimble will involve starting small, accepting there may be failures along the way, identifying what strategies will work for your business, and learning to scale quickly. As blockchain looks very likely to restructure the hyper-competitive retail industry in Australia, a nimble approach will aid the successful realisation of blockchain’s potential.
Gaurav Sharma is head of products and resources in ANZ at Cognizant.
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