Why Should the Retail Industry Adopt the NFT Strategy

Why Should the Retail Industry Adopt the NFT Strategy

NFTs can also be a boon for retail procurement and supply chain as they can ensure and provide a certificate of authenticated physical goods.

By Tapan Sangal, Founder and Chief Evangelist of P2E Pro Pvt Ltd

Jul 13, 2022 / 9 MIN READ

The surge of Non-Fungible Tokens (NFTs) sees the retail industry viewing it as some multi-billion dollar rolling dice; it should instead explore NFTs as an advanced high-tech customer engaging tool. It’s a tool that does not just reward a retailer’s loyal customers, but also helps in increasing its customer base. Brands like Crypto-Crisp by Pringles, Wrangler, Adidas, Gucci, Burberry, Balenciaga, Dolce, and Gabbana, among others, are heavily committed to their respective NFT strategies.

Let’s first dwell a bit on what NFTs really are and then move to unimaginable opportunities they create for the retail industry with the latest case studies.  

NFTs are essentially digital certificates of authenticity and ownership of an asset, digital and non-digital. They are time-stamped, immutable, and embodied on a blockchain, which makes them iron-clad and indestructible! These digital assets are reshaping the concept of ownership while adding undeniable value to the flourishing digital ecosystem.

This digital trend has created some of the loudest buzzes in recent times. No wonder then that every industry, including auto, real estate, media, sports, art, and entertainment, is in hot pursuit of this powerful opportunity. The latest on the list is the retail industry, which also finds itself inspired by its creative ways to provide interesting and unique experiences for its customers.

Tool to Engage and Innovate

The NFT phenomenon is being embraced, slowly but surely, by the retail sector in many strategic ways by keeping in mind that it is a still-evolving notion. Be it as a new revenue-generator through virtual sales by activating and nurturing online communities for brand engagement and loyalty creation, or be it in reducing friction in e-commerce and eliminating counterfeiting of products, the retail sector can find innovative ways to engage with the NFTs to enhance its customer experiences.

The building of online loyal communities appears to be one of the most lucrative exploitations of the NFTs by retail brands. Such communities are encouraged as exclusive clubs perceive the NFTs as a status symbol that grants them access to special events, early product releases, special drops, and more such rewards that generate the often-chased buzz driving the sales and revenue. Brand awareness, cultivating loyal brand influencers and brand storytelling remains the humble perks of adopting the NFT route.

Making Room for Expansion

One of the much-lauded applications associated with NFT is that it provides expansion of a possible retail market for the physical product by creating its virtual digital twin and selling it separately in the virtual space, purely on its design and aesthetics. It could also serve as an excellent market research tool that allows the retailers to launch the digital version of a product virtually, the success of which allows the pursuance and execution of the said product on a later date with the acceptance and approval of the design.

The on-time inventory management, a dream option for any retail B2C manufacturer, becomes a natural progression of the ‘dematerialized to materialized product’ strategy.

Provides Transparency and Security in Logistics

NFTs can also be a boon for retail procurement and supply chain as they can ensure and provide a certificate of authenticated physical goods. It eliminates the entire complex paper trail involved in the in-transit trail of ownership. Imagine, we are talking about the paper trail for thousands of retail goods at a time! NFT’s unique trait of time-stamp, along with smart contracts engineered on a private blockchain, takes care of the minutest of logistical details. 

Going Mainstream with NFT

NFT, which started as a niche segment known only to crypto enthusiasts, has now become a trending community globally. The retail industry needs to embrace this technology in a way that makes it accessible to the average customer and hence, makes it more mainstream. The retailers need to buy a virtual estate and cement their presence in the virtual world by creating digital twins of their existing stores or even a futuristic virtual store and allowing its customers to buy in the real as well as the virtual shops. This immersive experience, coupled with the dematerialized design and the final product to be manufactured as per the NFT, is sure to delight customers. Isn’t this what every retailer’s heart wishes for?

Prepares Marketers for Metaverse

Metaverse, the virtual world with virtual life, is around the corner.  The virtual space has become a hotspot with virtual lands being purchased on it as well as product displays and fashion shows being planned on it. This makes it even more imperative for retailers to adopt the NFT strategy. Armed with this strategy, the retailers can ensure they retain their space when a large part of the economy shifts to the Metaverse in the near future.

The retail industry is leaving no stone unturned in a bid to stay relevant in this ever-increasing virtual world ensuring the engagement of not just the millennials but the digi-natives, the Gen-Zers, and the new generation, Gen-Alpha. It would be wise for the retail sector to regard the NFT phenomenon as a powerful strategy to engage the customer, garner cultural relevance, and acquire the much-desired competitive edge. One of the first steps in that direction would be to accept the fact that NFT is not a multibillion-dollar rolling dice, but much more than that!

NFT’s Scope in Retail

The use-case list of NFT for the retail industry could be as far-reaching as the human imagination. Some of these include:

-    Tokenizing or creating NFTs for after-sale services, 
-    Limited edition of physical products and digital luxury goods with snob value
-    Availability of secondary market for digital/physical products NFTs and after-sales service tokens
-    Manufacturing process for handmade as well as machine-made products
-    Collectible designs and food having a nostalgic value like birthday cake or wedding dress

A Word of Caution

To elevate customer experience, the current prevalent protocols used for creating NFTs need to be revisited to address the:

- Issue of enabling KYC-buyers to own an NFT
- Nuances of interactions between intellectual property laws of the land and NFTs
- Problem of handing over the possession of the digital asset attached to the proof of authentication/ownership information stored in an NFT to its buyer.
 

The surge of Non-Fungible Tokens (NFTs) sees the retail industry viewing it as some multi-billion dollar rolling dice; it should instead explore NFTs as an advanced high-tech customer engaging tool. It’s a tool that does not just reward a retailer’s loyal customers, but also helps in increasing its customer base. Brands like Crypto-Crisp by Pringles, Wrangler, Adidas, Gucci, Burberry, Balenciaga, Dolce, and Gabbana, among others, are heavily committed to their respective NFT strategies.

Let’s first dwell a bit on what NFTs really are and then move to unimaginable opportunities they create for the retail industry with the latest case studies.  

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