Retail Executive

JAN-FEB 2018

Retail Executive is the trusted advisor to top retail executives from the industry’s most profitable retailers. We help retail executives succeed in their job role and grow their business via exclusive, actionable, peer-driven content.

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The Prospects For Blockchain Adoption In Retail The supply chain stands to gain big from blockchain. D E B O R A H W E I N S W I G Managing Director, Fung Global Retail & Technology ▶ INTEROPERABILITY BETWEEN NEW AND LEGACY SYSTEMS . Legacy infrastructures will be the main obstacle that slows down the adoption of blockchain for many businesses, as blockchain solutions require significant changes to existing systems. Add to this the challenges of technical understanding, and the implementation of de- centralized databases likely falls outside of the traditional IT development skillset. ▶ SCALABILITY . There are lots of startups trying to create their own blockchains, which could create silos and walled gardens. As a result, the Enter- prise Ethereum Alliance is trying to create a set of standard blockchain protocols to fit business needs. However, the initiative still has a long way to go to achieve its mandate. HOW BLOCKCHAIN FITS IN While those challenges are significant and may take time to resolve, other retail issues stand to be greatly improved by the application of blockchain technology. Particular security concerns such as the risks associ- ated with operating centralized databases, the risk of third parties counterfeiting branded goods, and sup- ply-chain opacity all have an answer in blockchain technology. Looking further into supply chain, it can also help to resolve incompatible databases across dif- ferent supply-chain nodes. o briefly define it, blockchain is a distribut- ed and decentralized database that keeps digital records of historical transactions, eliminating the need for third-party veri- fication and enabling real-time information exchange. The four pillars of blockchain technology are security, transparency, trust, and speed. The manner in which transactions occur provides all four for all participants, and transactions occur in minutes, if not seconds, rath- er than over the longer time frame that many banking activities require. But don't take my word for it: Citi Innovation Lab's Shai Rubin gives a clear and understandable overview of the technology, in which he emphasizes that Block- chain is not Bitcoin, in this video. So how can blockchain fit into the retail industry, and how close is retail to adopting it? Since blockchain technology is still in its infancy, companies will likely face significant adoption chal- lenges, which is why we believe it will have a mid- to long-term impact on the industry rather than being felt in the immediate future. Some of the challenges we see in retail's adoption of blockchain include: ▶ UNCERTAINTIES IN DEVELOPMENT . Still in the early stages of its development, blockchain technolo- gy faces inevitable uncertainties around the cost and design of the network infrastructure. T There's been much talk about blockchain as a disruptor in industries as diverse as financial services, insurance, and government recordkeeping. Its inherent transac- tional qualities, coupled with a mass consumer tendency toward person-to-person interactions, make blockchain a seemingly natural fit for retail. BLOCKCHAIN technology By D. Weinswig THE PROSPECTS FOR BLOCKCHAIN ADOPTION IN RETAIL RETAILEXECUTIVE.COM JANUARY/FEBRUARY 2018 26

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