Explained: How blockchain might be the answer to retail theft

Retail theft is a real thorn in the flesh for brick-and-mortar merchants. In the US alone, it is estimated that $700,000 per $1 billion worth of sales revenue is lost to retail theft every year. This amounted to losses worth $94.5 billion in 2021, as per data from the Organised Retail Crime Survey by the National Retail Federation (NRF).

Over the years, several individuals and companies have tried to find a solution to this menace, but to little avail. However, that could soon change thanks to Lowe’s. The American home improvement giant is working on a solution that combines blockchain and other emerging technologies to deliver the necessary blow to retail thieves. Lowe’s has named this retail theft prevention system “Project Unlock” and it could have massive potential in the future.

But what is Project Unlock and how does it work? Tag along to find out.

For the longest time, retail store owners have used traditional ways — such as heavy lock and key mechanisms — to prevent thieves from stealing their goods. However, experts suggest that this approach often pushes customers away and eventually leads to reduced sales. Moreover, judging by the statistics, these methods haven’t been very effective.

Keeping this in mind, Lowe’s Companies Inc has decided to work on a smarter solution — Project Unlock. It uses low-cost Radio Frequency Identity (RFID) chips in combination with the Internet of Things (IoT) and blockchain technology to create a virtual security system that can prevent the theft of goods within a retail store.

Two interconnected systems are at work here. The first part of the protocol is the Point-of-Sale (PoS) activation system. This system ensures that only goods that are purchased legally will be activated and become operational. Whereas goods that are stolen will not be activated and will not work.

To achieve this Lowe’s is putting RFID chips on each of the products. These chips contain unique serial numbers allocated for the products and when scanned during purchase, they activate these products. In the case of Lowe’s, most of these products are power tools like drills, nail guns, electrical saws, etc.

The second component of the protocol employs blockchain technology to maintain a transparent, immutable record of transactions and legal purchases. These transaction details are tamper-proof and accessible to all. Project Unlock will maintain a transparent record where the purchases will be documented without revealing the details of the buyers.

As a result, if someone tries to resell a stolen item in the market, the buyer can easily check the authenticity of the product and check if it is a stolen item. To achieve this, the company will create unique NFTs (Non-Fungible Tokens) for each item in its store.

Lowe’s believes that Project Unlock can be established as a security measure on a much larger scale and the company sees a world of opportunity with their solution. For starters, the system can be adapted for any product with moving parts or electrical components, such as home appliances, cars, smartphones and other gadgets.

It can also be tweaked for other industries and products. For instance, David Menard, the CEO of asset verification company Real Items, stated that they have reached a MOM with SmartLabel, a company that generates QR codes for brands and their products. Through this partnership, Menard is trying to create ‘digital passports’ (in the form of NFTs) for products. This system will help track a product’s history throughout its life. While this may not do much in terms of security, it does offer an easy way to verify the authenticity of a product, and this can be handy across industries.

However, the only challenge remains in people’s limited understanding of blockchain technology and that may be a barrier to greater adoption of blockchain-empowered security solutions. Also, people associate blockchain with cryptocurrencies, and judging by what happened in the crypto space during the previous year, retailers may be sceptical. However, Lowe’s believes this will not hamper the development or the adoption of Project Unlock. The company believes that without adopting new technologies, it will be seemingly impossible to survive in the coming future.

The blockchain revolution has only just begun, but it has already managed to revolutionize the way several industries and businesses operate. And while it remains to be seen how Project Unlock unfolds over the coming years and how it can be implemented across other kinds of products in the future, the potential of such a system is undoubted.