What are the Benefits of Blockchain in Retail Fashion & Luxury?
Enterprise Ethereum gives retailers, manufacturers, and end-users unprecedented transparency, traceability, and tradability in retail fashion and luxury supply chain management.
- Transparency: This enables companies to share verifiable claims with their consumers to improve authenticity and enhance consumer trust.
- Traceability: This enables companies to track the entire provenance of their products and their underlying elements from source-to-sale.
- Tradability: This enables customers to tokenize non-fungible assets that can be held, purchased, exchanged and traded at any time, anywhere.
These core capabilities enable further benefits to stakeholders across the industry:
- Support of sustainable practices
- Redefinition of customer experience
- Brand authenticity
- Enhancement of consumer trust
- Improved data management
- Reduced costs and settlement time
How does blockchain support sustainable practices?
Blockchain has the ability to track any digital or physical product throughout its lifecycle. Transparency in supply chain tracking gives producers a bird-eye view into their value chain, allowing them to guarantee the proper handoff of third-party goods and final product labeling. Blockchain can track the progression of assets, record the information, and show previous asset records. It has the potential to expand the sustainable and ethical production and consumption of any commodity on a global scale.
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How does blockchain redefine customer experience?
Sustainability has gone from a ‘nice-to-have’ to an almost absolute necessity. Nielsen reports that 66% of global consumers and 73% of millennials are willing to pay more for sustainable goods. By tokenizing physical assets and allowing consumers to see from where their items are sourced, retailers are using blockchain technology to redefine luxury and customer experience.
For example, LUXARITY hosts an annual Preloved Pop-Up sale for gently used luxury retail items. When customers scan an item’s QR code, they are presented with background information on the item: who owned it, where it was worn, and the positive environmental impact of the purchase. The code also reveals a digitized handwritten note from the original owner of select items. Among other benefits, customers can decide which charity will receive their donation and track how their donation has been spent transparently on the blockchain.
How does blockchain bring authenticity to retail fashion and luxury?
Blockchain technology enables brands to tokenize non-fungible assets, allowing each asset to be held, purchased, exchanged, and traded with ease. Customers may log in to a brand’s website to create and prove ownership of a luxury asset that can be verified and later transferred to another party.
Luxury retail items can be labeled with a one-to-one counterfeit-proof feature and tracked through digital twin technology, which connects the physical world to the digital world.
How does blockchain enhance consumer trust?
The average transparency score amongst the top 200 most prominent fashion brands and retailers is just 21%. Using blockchain, brands can digitize, track, and trace the entire lifecycle of a luxury item. With blockchain, brands can create an immutable record of all steps in the supply chain, capture specific data points, such as sustainability certifications and claims, and provide open access to this data publicly.
Brand trust tops the list of sustainability factors that influence purchasing for nearly two-of-three (62%) consumers globally. Transparency into the supply chain increases customer trust scores, which enhances the client experience and bolsters brand connectivity. Heightened customer trust scores translate to increased customer loyalty and lifetime value.
How does blockchain improve data management?
Managing data in silos leads to suboptimal processes and critical reconciliation issues. Critical information can be easily appended on a blockchain and securely shared across business lines, operations and partners. Blockchain is the go-to technology for sharing information when trust is at stake.
How does blockchain reduce costs?
Blockchain technology can significantly reduce operating costs in retail fashion and luxury by providing better data management tools, enhancing supply chain management, and reducing the risk of counterfeit and grey markets. While supply chain advancements and product authenticity is covered above— improvements in data management prompt cost savings from new kinds of Just-In-Time inventory management and improved trust in outsourcing. Blockchain provides a lightweight and easy to integrate layer for data reconciliation across service lines and operations.
What are the Blockchain Use Cases in Retail Fashion and Luxury?
- Digital Twins: Linking the physical to the digital
- Traceability of raw material and products throughout the lifecycle
- Loyalty programs
How does the digitization of assets impact retail fashion and luxury?
Counterfeits worth $590bn a year made up 3.3% of global trade in 2016. Tagging physical objects with IoT, RFID tags, photography, or QR codes enables the creation of “digital twins” on the blockchain. These allow brands to mitigate counterfeit risks by digitally tracking products along the supply chain and after the point of sale. This digital representation of the product on the blockchain— also known as tokenization, allows stakeholders to access the tracking data and to transact in real-time without compromising sensitive information.
How does blockchain impact product traceability?
The global luxury market will reach €1.3 trillion (~$1.5 trillion) by 2025, with millennials representing 50% of the total market. As millennials and generation Z consumers drive 85% of global luxury sales growth, the expectation for luxury brands to align with their values becomes progressively more important. Distributed ledger technology allows brands to better manage their supply chain processes from raw material to the final consumer and manage large data sets in a more efficient and transparent way. Brands willing to leverage blockchain technology to showcase this level of information to the consumers will be a huge competitive advantage.
How does blockchain impact loyalty programs?
80% of luxury sales today are “digitally influenced” from across the globe, yet the value from loyalty programs are generally locked within limited jurisdictions. As customers embrace a global lifestyles, their expectations for seamless global transactions increase. Tokenization unlocks a new loyalty program paradigm, allowing luxury shoppers to transact with various partners outside of the brand.