The retail business is among the most essential sectors of the United States financial system. Unfortunately, the COVID-19 pandemic has left the trillion-dollar retail sector weak to in-store theft. 

Findings from the National Retail Federation’s 2022 Retail Security Survey show that retail losses from stolen items elevated to $94.5 billion in 2021, up from $90.8 billion in 2020. Some retailers additionally should lock away sure merchandise to forestall theft, which can result in decreased gross sales attributable to shoppers’ lack of ability to entry items.

Retailers look towards blockchain to unravel retail theft

Given these excessive measures, many progressive retailers have began wanting towards expertise to fight retail theft. For instance, Lowe’s, an American house enchancment retailer, has lately applied a proof-of-concept known as Project Unlock, which makes use of radio frequency identification (RFID) chips, Internet of Things sensors and blockchain expertise. The resolution is at present being examined in a number of Lowe’s shops within the United States.

Josh Shabtai, senior director of ecosystem apply at Lowe’s Innovation Labs — Lowe’s tech wing that developed Project Unlock — advised Cointelegraph that Project Unlock goals to discover rising expertise to assist curb theft whereas creating higher buyer experiences.

Recent: What is institutional DeFi, and how can banks benefit?

To accomplish this, Shabtai defined that RFID chips are used to activate particular Lowes’ energy instruments on the level of buy. “So if a customer steals a power tool, it won’t work,” he mentioned.

Shabtai famous that RFID chips are a low-cost resolution that many retailers use to forestall theft. According to the National Retail Federation’s 2022 Retail Security Survey, 38.6% of outlets already implement or plan to implement RFID methods. However, Shabtai defined that combining RFID methods with a blockchain community can present retailers with a clear, tamper-proof document to trace in-store purchases. He mentioned:

“Through Project Unlock, a unique ID is registered and assigned to each of our power tools. When that product is purchased, the RFID system activates the power tool for use. At the same time, the transaction can be viewed by anyone, since that information gets recorded to a public blockchain network.”

Mehdi Sarkeshi, lead venture supervisor at Project Unlock, advised Cointelegraph that Project Unlock is predicated on the Ethereum community. Sarkeshi elaborated that every product underneath Project Unlock is tied to a pre-minted nonfungible token (NFT), or a digital twin, that can obtain a standing change upon buy.

“A product’s NFT undergoes a status change when it is either sold by Lowe’s, if it has been stolen, or if the status is unknown. All of this information is publicly visible to customers and resellers since it’s recorded on the Ethereum blockchain. We have essentially built a purchase authenticity provenance for Lowes’ power tools,” he mentioned.

While the idea behind Project Unlock is progressive for a big retailer, David Menard, CEO of asset verification platform Real Items, advised Cointelegraph that his agency has been exploring an analogous resolution. “Traditionally, RFID tags prevent theft, so this problem has already been solved,” he mentioned. Given this, Menard famous that Real Items combines digital identification with bodily merchandise to make sure that stolen gadgets might be accounted for. He mentioned:

“If physical items are paired with digital twins, then retailers can know exactly what was stolen, from where and from which product batch. Retailers can understand this with more clarity versus information generated by RFID systems.”

According to Menard, Real Items at present has a memorandum of understanding with SmartLabel, a digital platform that generates QR codes for manufacturers and retailers to supply shoppers with detailed product data. He shared that Real Items plans to implement “digital product passports” with SmartLabel merchandise sooner or later. “We view digital product passports as the foundation for storing information about a product throughout a product’s life cycle,” he mentioned.

Menard additional defined that Real Items makes use of the Polygon community to retailer product data. It’s essential to level out that this mannequin differs from Project Unlock since a blockchain community is just used right here to document details about a sure merchandise. “We use a product’s digital twin — also known as its NFT — for engagement. It can be tied to anti-theft, but it’s more about providing retailers with useful data.”

While the options being developed by Lowe’s Innovation Labs and Real Items may very well be a game-changer for retailers, the rise of the metaverse may additionally assist curb retail theft. According to McKinsey’s “Value Creation in the Metaverse” report, by 2030, the metaverse may generate $4 trillion to $5 trillion throughout shopper and enterprise use circumstances. The report notes that this contains the retail sector.

Marjorie Hernandez, managing director of LUKSO — a digital life-style Web3 platform — advised Cointelegraph that designer manufacturers like Prada and Web3 marketplaces like The Dematerialised, the place she can be CEO, are already utilizing NFT redemption processes.

Hernandez defined that this enables communities to buy a digital good in a metaverse-like setting, which might then be redeemed for a bodily merchandise in retailer. She mentioned:

“This redemption process allows retailers to explore new ways to authenticate products on-chain and provide a more sustainable production process with made-to-order demand. This also creates a new and direct access channel between creators and consumers beyond point of sale.”

Hernandez believes that extra retailers will discover digital identities for life-style items within the coming 12 months. “This allows brands, designers and users to finally have a transparent solution for many of the problems facing the retail industry today, like counterfeit goods and theft.”

Will retailers undertake blockchain options to fight theft?

Although blockchain may assist clear up in-store theft shifting ahead, retailers could also be hesitant to undertake the expertise for a number of causes. For occasion, blockchain’s affiliation with cryptocurrency could also be a ache level for enterprises. Recent occasions just like the collapse of FTX reinforce this. 

Yet, Shabtai stays optimistic, noting that Lowe’s Innovation Labs believes that it’s essential to contemplate new applied sciences to higher perceive what’s viable. “Through Project Unlock, we have proven that blockchain technology is valuable. We hope this can serve as a proof point for other retailers considering a similar solution,” he remarked. Shabtai added that Lowe’s Innovation Labs plans to evolve its resolution past energy instruments shifting ahead.

Recent: Redeeming physical NFTs: Easier said than done?

While notable, Sarkeshi identified that it could be difficult for shoppers to grasp the worth of utilizing blockchain to document transactions. “For instance, if I’m a customer buying a second-hand product, why should I care if it was stolen,” he mentioned. Given this, Sarkeshi believes {that a} shift in buyer mindset should happen for such an answer to be totally profitable. He mentioned:

“It’s a culture building challenge. Some customers will initially not feel good about buying a stolen product, but we need this to resonate across the board. We want customers to know that when a product is stolen, everyone across the supply chain gets hurt. Building that culture may be challenging, but I believe this will happen in the long term.”