How Blockchain Technology Can Create Transparency In Retail
We’re told to shop locally in order to reduce the carbon footprint of our everyday items, but shopping locally isn’t as easy as it might first seem. With most apparel products requiring some level of ‘processing’, it’s almost guaranteed that where the materials have been grown and the where the manufacturing processes have taken place are in completely different countries (and sometimes even different continents).The retail industry has reached a bit of an impasse - sustainability-conscious consumers are demanding more locally made products, retailers are feverishly marketing ‘local’ products to eager buyers yet there’s a crucial step missing in this chain. When a ‘Made in France’ label can no longer be taken at face value thanks to the ever-growing chain of suppliers, producers and manufacturers it takes to create a finished product from raw material, something has to give.
Enter blockchain technology. In its simplest form, blockchain is a series of time-stamped data, secured and bound to each other using cryptographic principles. Having gained increasing traction over the last few years (it was originally designed to enable crypto-currencies), it’s believed that blockchain technology (sometimes known as DLT - distributed ledger technology), is at the brink of revolutionising many industries, including retail. Aiming to create a digital ‘papertrail’ for the life cycle of products, blockchain has the potential to change our understanding of retail manufacturing. Essentially creating a time-stamped record for every transaction related to a product, consumers can in theory be able to trace an item from its origins to the store. No longer would we have to rely on labels that are often for all intents and purposes misleading and designed for consumer marketing. Better for the consumer, but also better for the retailer, who can now categorically hold their suppliers accountable for child labour, unethical working conditions, poor quality-ingredients and many more difficult to trace issues in the murky retail industry waters.
Imagine walking into a department store and be able to scan a QR code on a cotton T-shirt to reveal what date the cotton was picked from a field in Spain, where the manufacturing took place in Portugal, and finally what date the T-shirt was shipped to the logistics centre in France along with every other little step undertaken before it arrived on the hanger before you? You might be surprised at how far the item has travelled in its composite forms and perhaps you’d choose to spend your money a little differently based on this information. Understandably, many retailers might be fearful about what this technology could expose about their processes or how it could undermine certain sustainability claims they’ve made to consumers. This is all the more reason to support the implementation of blockchain technology - in order to hold retailers accountable. Only then will relationships of trust be built between consumer and supplier for a better customer experience and improved customer loyalty.
Even though the benefits of blockchain technology are apparent for consumers, the potential gains for retailers are tremendous. In December 2019, a young British girl writing christmas cards bought from the supermarket Tesco, discovered that one of the cards had already been filled out. The message was a plea for help from a Chinese prisoner claiming to be packing the christmas cards as part of his prison labour. This message sparked frenzied media interest in how a British retail giant couldn’t have known that one of it’s Chinese suppliers was using prison labour to package consumer goods. What’s worse is that the cards in question formed part of a special charity range, promoted to customers as being a conscientious choice. The introduction of blockchain technology could provide a way for retail giants to gain much needed transparency over their international supply chains, rather than the ‘don’t ask, don’t tell’ policy seemingly in practice today.
French retailer Carrefour implemented blockchain technology in 2018 in order to let customers track meat, milk and fruit bought in the store. Allowing consumers to see when any given product was packed or harvested and giving them an opportunity to avoid products that have been genetically modified or have come into contact with antibiotics has not only increased their sales but (arguably more importantly), the level of trust their customers place in them. According to Carrefour’s blockchain manager, Emmanuel Delerm,“customers can scan a QR barcode on a pomelo grapefruit with their phone and find out the date of harvest, location of cultivation, the owner of the plot, when it was packed, how long it took to transport to Europe and tips on how to prepare it,'' creating huge transparency where there was previously none. With customers spending upto 90 seconds reading this provenance information, it’s clear that modern consumers have an appetite for knowing where their products are coming from.
The luxury industry is another key retail area where blockchain can have revolutionary impact - notably in the fight against counterfeit goods. LVMH group is the latest luxury conglomerate to have announced that they will be implementing blockchain technology to strategically track luxury goods and guarantee authenticity. With the quality of fake goods getting higher and more and more fakes coming out of genuine factories, blockchain presents itself as a real bastion of hope against the growing counterfeit market. Even though blockchain is currently still associated with large retailers (Amazon, Walmart and Alibaba have all recently jumped on the blockchain bandwagon in a bid to show consumers that they can provide transparency and traceability despite their often mysterious supply chains), the technology is spreading to smaller retailers too. As consumers become less trusting of ‘Made In’ labels, being able to provide more conclusive evidence of sustainability should be high on the priority list of small retail businesses to ensure they don’t lose their edge to big business. We’re hopeful that while shopping locally may not get any easier, we’ll all soon be better informed to make the best choices when it comes to shopping.