Blockchain is Changing the Retail Industry from the Container Ship to the Closet

The Nike Air force 1 sneaker debuted in 1982 and became an instant cultural icon worn by celebrities ranging from NBA Stars to hip-hop artists. It was the must-have sneaker when it burst on to the scene and still is. Nike was ground-breaking in both shoe design and its product and customer experience marketing. The shoe wasn’t just a shoe — it was marketed as a “lifestyle.”

More than 40 years later, Nike is still pioneering the retail industry by combining today’s most significant and transformative technology available with its iconic shoes. The company has taken the Air Force 1 to the next level by utilizing blockchain technology to create a unique and collectible digital experience for one of its iconic sneakers. Nike’s Swoosh platform, launched in November 2022, has been a major focus for the company in recent months as it marks their entry into the world of NFTs. The Our Force 1 collection is the first of many offerings expected from Nike, with a range of designs inspired by the original Air Force 1.

Nike is one of many companies exploring the use of blockchain technology and how it can benefit their businesses. Luxury brands like LVMH are putting blockchain to work to ensure authenticity and eliminate fraud, while others like DeBeers are addressing supply chain and sourcing challenges with blockchain’s immutable and decentralized ledger. Furthermore, the promise of a total immersive customer experience via the Metaverse is quite attractive to retail organizations that are looking beyond just brick-and-mortar and online shopping to attract and engage with a new generation of shoppers.

Blockchain isn’t some hypothetical idea in retail. It’s here, it’s being used, and its impact will change how brands interact with their customers. Here’s how:

Supply Chain Implications:

One of the significant advantages of blockchain technology in retail is its ability to create a more transparent supply chain. Retailers can use blockchain ledgers to track their products from the manufacturer to the end consumer, ensuring that the products are authentic and have not been tampered with. Blockchain technology also improves supply chain operations by allowing retailers to track specific timing and location of product — alerting them of merchandise delays before it ties up the entire system. This is especially key with international shipments.

Customer Engagement on Steroids:

The customer is still king even as the methods and means to reach them change over time. What makes blockchain technology so attractive to retailers is the ways in which it optimizes legacy customer incentive programs like loyalty and rewards — simplifying the process for consumers and reducing the administrative burden. Blockchain technology also helps retailers to reduce fraud and chargebacks by creating a tamper-proof record of each transaction, making it easier to resolve disputes in real-time.

Retailers are also leveraging the potential of the metaverse, a virtual world where users can interact with each other and with digital objects in a simulated environment, to create immersive shopping experiences for customers.

While Roblox, Decentraland and Sandbox are of the most popular metaverse platforms other consumer brands are leveraging 3D enabled digital spaces, where people can socialize and shop. Retailers are also looking to create virtual stores personalized to each customer’s preferences and shopping history, offering a more personalized experience. Retailers are also hosting events and experiences in virtual spaces, reducing costs associated with physical events and reaching a wider audience.

The metaverse also offers retailers the opportunity to experiment with new retail concepts and products. Retailers can test new store layouts or product designs in a virtual environment before committing to a physical store or product line, reducing the risk associated with introducing new products or concepts to the market. The metaverse can also create a sense of community among customers, bringing customers together, fostering engagement and loyalty, and building a strong brand identity.

The Who’s Who of Retail Are All In On Blockchain:

After losing an estimated $98 billion (672.4 billion RMB) in a single year due to counterfeiting, the luxury industry is embracing a tech-forward crusade to veto the imitation market. The sector may not be able to stop the production and sale of replicas, but it can make it easier for genuine luxury buyers to validate the real thing. For instance, the next time you buy a legitimate luxury handbag, chances are that it will come with its very own verifiable and traceable digital identity. Blockchain technology can also help retailers to reduce fraud and chargebacks, where customers dispute transactions and request a refund. By using DLT, retailers can create a tamper-proof record of each transaction, making it easier to resolve disputes in real-time.

Several luxury brands, including LVMH, Prada, Mercedes-Benz, OTB, and Richemont, are implementing blockchain technology to track and trade luxury goods. The technology offers a database mechanism to trace authenticity, origin, warranty, repairs, and even history of ownership, reducing the production and sale of replicas in the luxury industry. The Aura Blockchain Consortium, consisting of LVMH, Prada, OTB, and Richemont, promotes a single global blockchain solution open to all luxury houses.

As we move further into a digital world, it’s important for brands to focus on creating emotionally appealing retail experiences. In the metaverse, this means using sight and sound to create a space that feels as real as possible. With Nike taking some of the first steps into metaverse retail, it’s worth looking to them for guidance and tactics; attention to detail and a focus on providing an immersive experience will be key to brands being able to create retail experiences that are second to none — even in a virtual world.

But exceptional customer experiences and retail success in a Web3 world also depends on the behind-the-scenes operations and supply management that is so critical. You can’t offer a superior experience while recalling products due to spoilage. This is exactly why blockchain technology is the solution embraced by the retail industry for a variety of challenges and opportunities that the industry is grappling with.

Originally published at https://www.thestreet.com on May 2, 2023.