The Role of Blockchain Technology in High-End and Luxury Retail
For every luxury brand, class and sophistication remain key attributes that make them different from other run-of-the-mill brands. The customers of luxury products generally remain very sensitive to the delicate aspects of products. In recent years, blockchain technology has emerged as a solution for serving this clientele.
With an estimated market value of $3 trillion, luxury items offer a big opportunity for retailers. But being successful in this niche requires a solid command over the technologies and tools in order to ensure more transparency, product value, and a great shopping experience.
In this post, we are going to explain the key attributes of blockchain-based luxury retail and the key advantages of using blockchain technology for the retail market.
Blockchain in Retail Fashion & Luxury: Key Value Propositions
Blockchain is becoming increasingly popular as a technology solution for the retail industry. There are many benefits of using this technology, but here we will first have a brief look at the key value propositions of blockchain for luxury retail.
- Transparency: Thanks to blockchain technology, customers can have access to company claims that can be verified instantly before trusting any information.
- Easy way to track: Thanks to easy traceability, companies can keep track of the entire process and provenance of various products from their sources to the sales counter.
- Easier trading with the value: Blockchain technology will also integrate digital currencies like Bitcoin or Ethereum for tokenizing the value of various assets and make transactions through them.
Apart from these key attributes, blockchain can help modern retail in many ways and literally bring about a revolution in the retail of luxury products. Let us explain these advantages one by one.
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Blockchain for Retail of Organic and Sustainable Luxury Items
There are many products that simply bear the “luxury” tag because of their organic roots and sustainable ingredients. Blockchain technology can actually help the practices and traditions of these organic products, in addition to helping their marketability.
Blockchain is capable of tracking any product throughout its entire life cycle, including its constituent ingredients and their sources.
The tremendous boost to transparency in supply chain tracking gives the manufacturer brands and retailers a detailed bird’s-eye view of the entire value chain. From the sourcing of the ingredients to the entire processing of various parts to the assembly line to the labeling of the goods, blockchain can keep track of every detail of the entire product life cycle. This will maintain better quality and authenticity of the organic and sustainable production practices.
Redefining Customer Experience
Since luxury items are expensive, customers expect great shopping experiences and great post-sales support from the brands. Good customer service is a prerequisite for any luxury brand to survive and flourish with popularity among its target audience. Blockchain technology can help retailers and manufacturers play a more responsible role for delivering great customer experience.
It is a known fact that buyers of luxury items have zero tolerance for mediocrity in customer service or business processes. Naturally, regular customer service provided by common brands just cannot fit the customer expectations of luxury brands.
Blockchain-based payment solutions like smart contracts can help customers to enjoy a more transparent payment process. With smart contracts, the payments are initiated only when both the sellers and the customers reach an agreement on the conditions of the transaction. This means the technology allows customers to pay for a product only when they are fully satisfied.
Superb after-sales service remains a key part of great customer service. The support team always works hard to help customers get the most out of their high-value items. Many manufacturing companies, particularly in the automobile and high-value gadget sectors, make a substantial income through the post-sales support. This is where a blockchain-based transparent supply chain and post-sales tracking of customer issues can play a great role.
Blockchain for Building Consumer Trust
For most fashion and luxury brands, transparency scores tremendously low, and most of them suffer from credibility crises among the users who have purchased their products once or a number of times. For fashion brands and luxury retailers, boosting this transparency score and improving consumer trust is extremely important. By using blockchain, luxury brands can now help customers authenticate and verify the processes and get a complete overview of the production very easily. Blockchain is increasingly being relied upon by luxury retailers all over the globe, principally to boost their credibility with a more traceable and transparent process open to their audience.
Trust of business brands is at the topmost priority for influencing buying decisions of consumers worldwide. From making the supply chain processes transparent and traceable to building consumer trust scores, blockchain technology and smart contracts can play a great role in assuring this. A better trust score and transparency will also improve the branding and connection with the target audience for business brands.
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Improving Data Management Through Blockchain
Many brands experience that data management in silos actually leads to less optimized processes and other critical issues related to reconciliation between several parties. This is where blockchain can play a great role, as the technology allows appending information continuously and securely while allowing access to this pool of information for different stakeholders and participants in a business process. When sharing information is crucial for maintaining optimum data security and trust, blockchain is the technology to opt for.
Blockchain for Reducing Costs
Finally, blockchain technology also plays a significant role in reducing the operational costs in the high-end retail fashion and luxury industry simply by helping with the quality of data management tools, boosting supply chain management, and minimizing the risk of counterfeit products and infiltration of grey market items.
Easier and smooth data management also helps reduce cost in other ways. In-time access to operational and business data helps to manage inventory and build trust in the outsourcing process. Blockchain offers a low footprint and easier way to append data layers to keep various processes in sync and informed.
The role of blockchain technology in high-end and luxury retail has already proved to be effective. In the years to come, more business brands entering into the luxury niche are likely to opt for blockchain technology.
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