In the past few years, many industries have poured resources into exploring how they can use blockchain to grow. The retail industry is no exception. During 2018, the U.S. retail sector spent double the amount of money on blockchain technology than it had in 2017 and annual revenues from blockchain retail asset tracking will leap to $4.5 billion by 2023. So what is blockchain and how is the technology being utilized in the retail sector?
“Blockchain is a digital, decentralized, distributed ledger that provides a way for information to be recorded, shared and maintained by a community." Blockchain enables direct peer-to-peer transfers of anything of value without the need for an intermediary. Most notably, blockchain technology was used as a foundation for Bitcoin, offering a way to record transactions via a shared ledger. While most people still associate blockchain technology with Bitcoin and other cryptocurrencies, the technology can be used in many other commercial applications as it can be used to record various types of transactions and track the movements of both tangible and intangible assets.
The application of blockchain technology can add value in various aspects of the retail industry including: (1) increasing transparency in the supply chain, (2) improving consumer loyalty programs, (3) refining logistical efficiencies, (4) assisting with payments, (5) combatting counterfeit products and (6) protecting customer privacy.
Most recently, there has been significant developments in the use of blockchain technology to increase transparency in supply chains. In 2016, Walmart announced its partnership with IBM on two proof of concept projects. (1) tracing the origin of sliced mangos sold in Walmart’s U.S. stores and (2) tracing the origin of pork sold in Walmart’s Chinese stores. To do this, IBM helped the Walmart technology team build a hyperledger fabric blockchain based food traceability system. The traceability system had a significant impact on Walmart’s mango supply chain, reducing the time required to track the origin of a package of mangos from seven days to 2.2 seconds. Significant improvements were made to the ability to track the pork supply chain in China as Walmart required each link in the chain to upload certificates of authenticity.
The partnership between Walmart and IBM led to the creation of IBM’s Food Trust program, “a network that connects growers, processors, distributors, and retailers through a permissioned, permanent and shared record of food system data”. Recently, the grocery chain Albertsons also signed onto IBM’s Food Trust program and began using blockchain technology to trace the romaine lettuce sold in their stores. For many companies in the retail sector, food safety is a very important issue and one where blockchain technology has the potential for application. By using blockchain technology to track food supply chains, companies and supply chain partners will have a greater ability to isolate contaminated products in the event of an outbreak, such as the E. coli outbreak at the end of 2018. Blockchain technology is not only facilitating improvements in food safety but is also helping companies build trust with their consumers.