We explore how blockchain is solving business problems in retail and impacting on events and experiences
The retail sector is no stranger to innovation and is often the place where the latest technologies make their business debut. In recent years, the sector has been at the forefront of the Brand Experience Revolution, and many brands have made extensive use of new technologies like VR, AR, and IoT to create immersive, engaging experiences for their customers.
In this context, it is tempting to see Blockchain as just one new technology among many. But that would be a mistake.
That’s because Blockchain promises to bring about a far deeper change in the way that retailers do business than any other emerging technology. Rather than being an add-on to existing business practices, it represents a wholesale revolution in the way that retailers operate.
As Marco lansiti and Karim R. Lakhani, Professors of Business Administration at Harvard Business School, put it:
“Blockchain is not a “disruptive” technology, which can attack a traditional business model with a lower-cost solution and overtake incumbent firms quickly. Blockchain is a foundational technology”.
This said, it’s also apparent that the full potential of the technology has yet to be realised. In 2019 we appear to be at a critical point when it comes to the adoption and applications of Blockchain. Because of this, many analysts like Scott Greenwell, the Creative Director for Unleashed Technologies, have argued that “we’re at a similar moment with blockchain as we were in 1995 with the birth of the internet: while we could conceptualise what the internet was, we did not fully understand how it would change our digital world”. [Source: ASAE’s January/February 2018’s e-news]
Here we delve into what Blockchain is and the four key areas in retail that are being transformed by this technology.
What is Blockchain?
When most people think of Blockchain, they think of BitCoin and other cryptocurrencies. Whilst it is true that by far the biggest use of Blockchain technology to date has been in cryptocurrencies, the applications of the technology are far broader.
At its base, as Don and Alex Tapscott, Authors of Blockchain Revolution (2016), stated: “blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value".
The idea is relatively simple. When a customer wants to perform a transaction, they use specialised software to communicate this to a ledger. In contrast to traditional ledgers, however, the record of transactions in a blockchain is distributed across a large number of servers, each of which is able to verify their records against each other.
Though at the moment, most Blockchain transactions concern cryptocurrency, almost anything can be traded in this way. That’s why the market size for Blockchain is expected to reach 7.6 billion US dollars in 2022.
Critically, much of this growth is expected to come from outside the world of cryptocurrency. Blockchain has broad applications in various industries including Finance, Supply Chain, Security, Automotive, Internet of Things, Energy, and Healthcare. Uses of the blockchain in the healthcare sector, for instance, could be to securely store health records in a centralised database, and in industry, the blockchain could be used to track copyrighted and trademarked content and licensing rights.
But what about the retail sector?
Hilary Carter, Managing Director of Blockchain Research Institute (BRI) commented, ‘Just as blockchain technology is transforming other industries such as financial services, so too is it changing the game for retailers.
‘The technology is particularly well suited to this sector because it enables new levels of trust and transparency in product supply chains for consumers - lettuce products for example - and creates opportunities to solve supply chain problems quickly, helping to mitigate financial loss’.
Blockchain in Retail: Four Key Applications
Deloitte’s recent report on Blockchain in the retail sector identifies four key areas in which Blockchain technology is expected to revolutionise retail: consumer relations, supply chain logistics, and payment infrastructure.
Here at MCI, we would say that this is an almost comprehensive list, but also that it misses out on an important application of Blockchain technologies. This is the way in which the tech is also going to transform brand experience, by revolutionising the way in which corporate and consumer conferences and events are organised and realised.
Before we get to that, though, let’s take a look at the ways in which Blockchain is going to change retail for consumers, the supply chain, and in payment infrastructure.
Many aspects of consumer retail experience are likely to be transformed and improved by Blockchain.
At the broadest level, this is because blockchain tech allows customer data to be stored in a way that is much more secure, open, and transparent than traditional systems. One of the reasons why customers are (understandably) apprehensive to share personal details via customer loyalty programs, for instance, is that leaks of these details are a common occurrence. Blockchain is far more secure than traditional ways of storing customer data and is likely to encourage customers to share their data with retailers more readily.
And with more data comes the opportunity for greater customisation. It is feasible that ‘smart’ loyalty programs based on blockchain tech will be able, in the not-too-distant future, to offer personalised, exclusive rewards and experiences to retail customers, as well as being able to alert on targeted product recalls.
As technology develops, it is even possible that one of the base features under which the retail sector operates – that of companies selling goods to consumers – could be overturned. Because the blockchain allows ownership and transaction details to be updated instantly, some analysts have argued that it may give rise to a new kind of ‘sharing economy’ based on shared purchasing and ownership, in which the traditional retailer disappears altogether.
The supply chain is another area of retail promised to be transformed by blockchain. These are the areas in the supply chain that are most likely to be revolutionised by blockchain.
At the broadest level, the distributed ledger that is a basic feature of blockchain simply allows for greater integration when it comes to coordinating a network of suppliers and retailers. In order to do this, blockchain technology is paired with another important emerging tech, the Internet of Things, which also promises to transform the retail sector. Within a few years, it is feasible that every item moving through a supply chain will be tagged with a sensor that records its location, condition, and other information. This end-to-end supply chain will ensure total transparency on every stage of the product journey, allowing manufacturers to trace products from manufacturer and production to sale and delivery. All data will be stored on a distributed blockchain that is accessible to every company in the supply chain in real-time.
This next-level transformation of the supply chain need not be limited to B2B transactions either. Home delivery is quickly becoming the dominant way in which consumers receive their purchases but is reliant on a level of trust between retailer and consumer. The blockchain can provide this trust. Transparency of the supply chain will be vital in establishing brand trust; with fair trade welfare, sustainable sources and authentic provenance being increasingly important for consumers, retail brands will be able to verifiably demonstrate the consumer-to-business shared value through blockchain.
Lastly, even the contracts under which retail goods are sold are likely to be transformed by blockchain. One of the outcomes of the recent growth in cryptocurrencies has been the emergence of ‘smart contracts’. Originally designed to facilitate the sale of crypto securities, these contracts work by storing funds in an escrow system until both parties are satisfied. If run on a blockchain, these contracts eliminate the need for third-party moderation.
Payments and Contracts
A third area in which blockchain is likely to affect the retail sector is when it comes to payments and contracts. In fact, this is the major reason why many analysts see blockchain as a truly transformative technology because it directly affects the way that transactions are handled and overseen - blockchain promises to change the basic experience of buying or selling a product.
At the most basic level, this is because retailers are already able to take payment from consumers in blockchain-based currencies. This speeds up retail transactions and also helps both consumers and retailers avoid the costs involved with completing them via banks.
Blockchain-based payment systems need not be limited to consumer-retailer interactions, either. It is expected that B2B transactions will increasingly be completed over blockchain and that this will bring the same benefits (increased speed and decreased cost) to business interactions too.
Finally, blockchain is also expected to improve and simplify consumer protection systems. By moving product warranties away from paper and onto distributed, cloud-based storage, it will be easier to keep these guarantees up-to-date and transferable. Several blockchain wallets already offer users the opportunity to store their warranties, saving both them and retailers costly administrative work.
Brand Experience and Events
Blockchain is set to greatly impact how retailers deliver brand experiences to their customers, whether through one-off events or by simplifying and customising the way in which customers interact with brands.
This is likely to happen in two key ways. Firstly, blockchain is forecast to change the way in which retail events are organised, ticketed, and run. Going further, the technology will also feed directly into the design of the kind of experiential marketing that is becoming standard in the retail sector. Consumer brand trust will strengthen thanks to blockchain and the extra layer of security it offers. Brands, too, can benefit from cost savings and efficiencies which can then be passed back to the consumer with lower prices and heightened personalised experiences.
Signs of these changes are already apparent. As Robin Lokerman, Group President of MCI, puts it: “MCI has seen blockchain and cryptocurrencies as a growing subject for programme committees of the many conferences we organise. Especially in the Financial Services, Healthcare and Law sector events, has this subject come up”.
MCI is at the forefront of this innovative technology - MCI Canada created a Joint Venture with Blockchain Research Institute to launch BRG, a new company focused on creating a global community on enterprise blockchain. In 2019, MCI delivered the Blockchain Revolution Global (BRG) meeting - the first truly worldwide enterprise leadership community for blockchain. The inaugural conference took place in April 2019 uniting the world’s leading thinkers, builders and pioneers to accelerate the blockchain revolution.
In the short term, blockchain is likely to be used mainly in the planning of large-scale events. As Corbin Ball, speaker and independent third-party consultant focusing on meetings technology, says, “the major use for meetings will be for large sporting and music events where scalping and ticket fraud is common”.
However, as retailers and marketers grow used to the technology, and begin to see it’s possibilities, it is also likely to be applied in far broader ways. It will allow, for instance, retailers to undertake strategic analysis to directly engage with target audiences and deploy relevant creative experience design.
In this way, blockchain will likely become part of what has been the largest transformation in retail in recent years: the emergence of experiential marketing to directly communicate with customers. The nature of blockchain technology means that the focus of marketing can move away from ‘demographics’ and rapidly advance towards individual customers.
The sheer range of applications in which blockchain can be used means that retailers will need to stay vigilant over the coming years.
If you work in the retail sector, it is likely that you are planning to be able to take payments in blockchain-based currencies, or already do. Retailers operating with cryptocurrencies are positioned as forward-thinkers who are inclusive to their consumer’s various needs.
Brigid McDermott, Vice President Blockchain Business Development, IBM states “blockchain solves business problems where trust is part of the solution—you can’t do that with a database.”
Blockchain offers you the chance to design more impactful brand experiences for your customers, whether this is through spectacular one-off events at trade shows or consumer expos, or simply through deeply customising the interactions you have with them at every touchpoint.
The use of blockchain helps businesses to solve user experience challenges:
We’re ready to help you improve your user experience and influence change in your events - Get in touch today to discuss your brand event experience