The retail industry is among the biggest contributors to the American economy. The COVID-19 pandemic has unfortunately made the trillion-dollar retail sector more susceptible to in-store theft.
- The American home improvement giant, Lowe’s, is developing a system that combines blockchain technology with other cutting-edge technologies to strike a decisive blow against retail theft.
- This retail theft prevention system, named “Project Unlock”, could have a very bright future.
Retail Losses from Stolen Goods
According to National Retail Federation’s 2022 Retail Security Survey, retail losses because of stolen goods increased to $94.5 billion in 2021 from $90.8 billion in 2020. Some stores must lock up specific things to avoid theft, which may lead to fewer sales because customers need access to the merchandise.
Blockchain to Solve Retail Theft
Some resourceful retailers are increasingly using technology to fight retail fraud. For instance, the American home improvement retailer Lowe’s introduced Project Unlock, a proof-of-concept that uses blockchain technology, RFID chips, and Internet of Things sensors. The technology is being actively tested at several Lowe’s sites across the US.
According to Josh Shabtai, senior director of Lowe’s Innovation Labs,
“Project Unlock looks into novel technologies that can help prevent theft while enhancing customer experiences. To accomplish this, RFID chips activate Lowe’s power tools at the time of sale. A consumer cannot use a power tool that has been stolen.”
“Through Project Unlock, a unique ID is registered and assigned to each of our power equipment,” he continued. The RFID system turns on the power tool for use when that product is purchased. Since the transaction’s details are added to a public blockchain network, everyone can read them concurrently.
While Lowe’s Innovation Labs and Real Items’ products may revolutionize the retail industry, the growth of the metaverse may also make retail thievery less common. According to McKinsey’s “Value Creation in the Metaverse” report, consumer and business use cases for the metaverse could create $4 trillion to $5 trillion by 2030. The research adds that this also applies to the retail industry.
Designer Brands Adopting Blockchain
Designer companies like Prada and Web3 marketplaces like The Dematerialized are already implementing NFT redemption processes, according to Marjorie Hernandez, managing director of LUKSO. “This enables communities to buy a digital good in a setting akin to the metaverse that can subsequently be exchanged for a tangible object in a store. With the need for made-to-order products, this redemption procedure enables shops to investigate novel ways to validate products on-chain. Beyond the point of sale, this opens up a new and direct line of communication between producers and consumers,” she added.
Hernandez predicts that more merchants will investigate digital identities for lifestyle products in the upcoming year. “This enables businesses, designers, and users to finally have a transparent answer for many of the issues the retail industry is now facing, such as theft and counterfeit items.”
Will businesses use blockchain to curb theft?
Retailers may be reluctant to use the technology for many reasons, even though blockchain has the potential to assist in reducing in-store theft in the future. For instance, businesses may struggle with blockchain’s connection to cryptocurrencies. Recent occurrences like the demise of FTX serve to confirm this. Shabtai said,
“We have demonstrated the worth of blockchain technology through Project Unlock. We hope this can demonstrate the viability of such a solution for other shops. Lowe’s Innovation Labs intends to expand the scope of their solution beyond power tools.”
Analysts think that for such a solution to be entirely successful, there must be a change in the thinking of the customers. It isn’t easy to develop a culture. Although some customers will feel bad about purchasing a product that has been stolen at first, everyone should understand this. Customers should be aware that the entire supply chain suffers when a product is stolen. Although creating that culture may be difficult, it will eventually happen.