The blockchain as innovation in the dialogue between retailer and consumer

Intro

At a time when blockchain is experiencing a period of strong hype, overshadowing all other innovative technologies in communication, it is necessary to highlight that the number of application projects is still relatively low worldwide:

• 508 projects in 2020, according to data published by the Blockchain Observatory of the Politecnico di Milano;
• of which only 12% have moved to the operational phase.

However, 2021 has shown an acceleration by companies in all sectors, from government to finance, from agrifood to retail, in identifying application areas where this technology can bring the greatest competitive advantages, and 2022 seems to be the year in which many projects will see their operational application.

Public or private blockchains

One of the first questions that companies must answer when approaching this technology is related to the choice between public or private blockchains, although “purists” may disagree as they consider blockchain by its nature “public”.

In its simplest definition, the main difference between public and private lies in their primary characteristic:

• permissionless, public and open to everyone;
• permissioned, private and restricted to actors who have been granted permission to access it by a central authority.

Using as an example a company operating in the Retail Food sector, the blockchain could be used to make its supply chain traceable, certified and transparent for all actors involved.

Each authorized actor will have the opportunity to access and enter data related to business procedures:

• the production company will enter all information related to the product/batch loaded on the blockchain and its documentation;
• logistics will enter all information related to the movements of the product and its raw materials;
• the brand will view and track all information on the requested product/batch.

This type of use would lead to opting for a private (permissioned) blockchain, but if the retailer wanted to “extend” the production/distribution chain to the final consumer, to allow them to view all the information related to the entire product lifecycle for a more responsible and aware consumption, then the choice could be that of a public (permissionless) blockchain.

Taking these considerations into account, the best choice, as often happens, is a “hybrid” architecture:

• a permissionless/permissioned blockchain, public in reading but with writing accesses governed by the retailer, scalable and low-energy consumption.

The blockchain in Retail Food

In particular, in the Retail Food sector, some core processes have been identified in which, due to its characteristics and values, the blockchain could become the reference technological architecture in the near future, allowing companies to create innovation and improve their performance:

• agri-food traceability and traceability;
• supply chain integration;
• contracts with suppliers;
• loyalty cards;
• private payment cards.

Precisely in the context of agri-food traceability and traceability, Food Retailers have identified in the blockchain the opportunity to transform management born “from legal obligations” into an innovative process of dialogue and interaction with Consumers.

In fact, the blockchain is the perfect technology for the digital transformation of the value chain as it strengthens the certification of processes and data, reducing security risks and costs, and increasing the trust of Consumers, allowing all steps to be traced in a transparent, certified, and, above all, unalterable manner.

Applying this technology to mission-critical processes for the Retailer, such as product traceability and traceability, must be done without questioning the best practices in place but integrating, through GS1 standards, from EPCIS to DesAdv, from Application Identifier to Digital Link, a blockchain layer that guarantees retro-compatibility with all product handling and sales processes.

But integrating blockchain into business logic is an innovation journey that goes beyond the company’s brand reputation and becomes a new way of doing business, safely, quickly, and scalably ferrying the Retailer towards the future, opening up scenarios of value exchange within the supply chain between Producer and Consumer and emphasizing its centrality in this new B2B2C relationship.

Blockchain as a gateway to the Metaverse

The use of this new layer will make possible the true disruptive innovation of the process…the Consumer as an active player in the food supply chain.

The Consumer will access all the information about the product/batch life cycle, well beyond what is written on the label, the Retailer will establish a new engagement channel, and the Producer will have a new lever for communicating the quality of their products.

A new communication channel, synergistic with all the Retailer‘s digital touchpoints, which can be the gateway to the Metaverse thanks to the possibility of implementing an interaction between retailer and Consumer managed by a virtual assistant.

It will be the beginning of new forms of eCommerce where augmented reality, virtual reality, gaming, and customer experience will come together to bring the consumer to live inside their own virtual reality.

Spoiler alert

But how much of this is a reality in Italy? A lot!

During 2022, an important Italian food retailer will launch on the market a traceability and tracking solution based on blockchain for all products prepared and/or pre-packaged in-store with a strong innovation component in the consumer relationship.

Stay tuned…

Observers GS1 Italy