Using blockchain technology to combat retail theft

The retail manufacture is 1 of the astir important sectors of the United States economy. Unfortunately, the COVID-19 pandemic has near the trillion-dollar retail assemblage susceptible to in-store theft. 

Findings from the National Retail Federation’s 2022 Retail Security Survey show that retail losses from stolen goods accrued to $94.5 cardinal successful 2021, up from $90.8 cardinal successful 2020. Some retailers besides person to fastener distant definite products to forestall theft, which whitethorn pb to decreased income owed to consumers’ inability to entree goods.

Retailers look toward blockchain to lick retail theft

Given these utmost measures, galore innovative retailers person started looking toward exertion to combat retail theft. For example, Lowe’s, an American location betterment retailer, has precocious implemented a proof-of-concept called Project Unlock, which uses vigor frequence recognition (RFID) chips, Internet of Things sensors and blockchain technology. The solution is presently being tested successful respective Lowe’s stores successful the United States.

Josh Shabtai, elder manager of ecosystem signifier astatine Lowe’s Innovation Labs — Lowe’s tech helping that developed Project Unlock — told Cointelegraph that Project Unlock aims to research emerging exertion to assistance curb theft portion creating amended lawsuit experiences.

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To execute this, Shabtai explained that RFID chips are utilized to activate circumstantial Lowes’ powerfulness tools astatine the constituent of purchase. “So if a lawsuit steals a powerfulness tool, it won’t work,” helium said.

Shabtai noted that RFID chips are a low-cost solution that galore retailers usage to forestall theft. According to the National Retail Federation’s 2022 Retail Security Survey, 38.6% of retailers already instrumentality oregon program to instrumentality RFID systems. However, Shabtai explained that combining RFID systems with a blockchain web tin supply retailers with a transparent, tamper-proof grounds to way in-store purchases. He said:

“Through Project Unlock, a unsocial ID is registered and assigned to each of our powerfulness tools. When that merchandise is purchased, the RFID strategy activates the powerfulness instrumentality for use. At the aforesaid time, the transaction tin beryllium viewed by anyone, since that accusation gets recorded to a nationalist blockchain network.”

Mehdi Sarkeshi, pb task manager astatine Project Unlock, told Cointelegraph that Project Unlock is based connected the Ethereum network. Sarkeshi elaborated that each merchandise nether Project Unlock is tied to a pre-minted nonfungible token (NFT), oregon a integer twin, that volition person a presumption alteration upon purchase.

“A product’s NFT undergoes a presumption alteration erstwhile it is either sold by Lowe’s, if it has been stolen, oregon if the presumption is unknown. All of this accusation is publically disposable to customers and resellers since it’s recorded connected the Ethereum blockchain. We person fundamentally built a acquisition authenticity provenance for Lowes’ powerfulness tools,” helium said.

While the conception down Project Unlock is innovative for a ample retailer, David Menard, CEO of plus verification level Real Items, told Cointelegraph that his steadfast has been exploring a akin solution. “Traditionally, RFID tags forestall theft, truthful this occupation has already been solved,” helium said. Given this, Menard noted that Real Items combines integer individuality with carnal products to guarantee that stolen items tin beryllium accounted for. He said:

“If carnal items are paired with integer twins, past retailers tin cognize precisely what was stolen, from wherever and from which merchandise batch. Retailers tin recognize this with much clarity versus accusation generated by RFID systems.”

According to Menard, Real Items presently has a memorandum of knowing with SmartLabel, a integer level that generates QR codes for brands and retailers to supply consumers with elaborate merchandise information. He shared that Real Items plans to instrumentality “digital merchandise passports” with SmartLabel products successful the future. “We presumption integer merchandise passports arsenic the instauration for storing accusation astir a merchandise passim a product’s beingness cycle,” helium said.

Menard further explained that Real Items uses the Polygon web to store merchandise information. It’s important to constituent retired that this exemplary differs from Project Unlock since a blockchain web is lone utilized present to grounds accusation astir a definite item. “We usage a product’s integer duplicate — besides known arsenic its NFT — for engagement. It tin beryllium tied to anti-theft, but it’s much astir providing retailers with utile data.”

While the solutions being developed by Lowe’s Innovation Labs and Real Items could beryllium a game-changer for retailers, the emergence of the metaverse whitethorn besides assistance curb retail theft. According to McKinsey’s “Value Creation successful the Metaverse” report, by 2030, the metaverse could make $4 trillion to $5 trillion crossed user and endeavor usage cases. The study notes that this includes the retail sector.

Marjorie Hernandez, managing manager of LUKSO — a integer manner Web3 level — told Cointelegraph that decorator brands similar Prada and Web3 marketplaces similar The Dematerialised, wherever she is besides CEO, are already utilizing NFT redemption processes.

Hernandez explained that this allows communities to acquisition a integer bully successful a metaverse-like environment, which tin past beryllium redeemed for a carnal point successful store. She said:

“This redemption process allows retailers to research caller ways to authenticate products on-chain and supply a much sustainable accumulation process with made-to-order demand. This besides creates a caller and nonstop entree transmission betwixt creators and consumers beyond constituent of sale.”

Hernandez believes that much retailers volition research integer identities for manner goods successful the coming year. “This allows brands, designers and users to yet person a transparent solution for galore of the problems facing the retail manufacture today, similar counterfeit goods and theft.”

Will retailers follow blockchain solutions to combat theft?

Although blockchain could assistance lick in-store theft moving forward, retailers whitethorn beryllium hesitant to follow the exertion for respective reasons. For instance, blockchain’s relation with cryptocurrency whitethorn beryllium a symptom constituent for enterprises. Recent events similar the illness of FTX reenforce this. 

Yet, Shabtai remains optimistic, noting that Lowe’s Innovation Labs believes that it’s important to see caller technologies to amended recognize what is viable. “Through Project Unlock, we person proven that blockchain exertion is valuable. We anticipation this tin service arsenic a impervious constituent for different retailers considering a akin solution,” helium remarked. Shabtai added that Lowe’s Innovation Labs plans to germinate its solution beyond powerfulness tools moving forward.

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While notable, Sarkeshi pointed retired that it whitethorn beryllium challenging for consumers to recognize the worth of utilizing blockchain to grounds transactions. “For instance, if I’m a lawsuit buying a second-hand product, wherefore should I attraction if it was stolen,” helium said. Given this, Sarkeshi believes that a displacement successful lawsuit mindset indispensable hap for specified a solution to beryllium wholly successful. He said:

“It’s a civilization gathering challenge. Some customers volition initially not consciousness bully astir buying a stolen product, but we request this to resonate crossed the board. We privation customers to cognize that erstwhile a merchandise is stolen, everyone crossed the proviso concatenation gets hurt. Building that civilization whitethorn beryllium challenging, but I judge this volition hap successful the agelong term.”