Blockchain Integration in Customer Loyalty Programs: Insights From the Danish Grocery Retail Sector

Abstract

Digitalization has been prevalent in the grocery sector for years, leading to the emergence of digital customer loyalty programs. Existing literature points to the ability of blockchain technology to provide transparency and trust, presenting it as a well-suited solution for loyalty programs. This paper conceptualizes a potential integration of blockchain technology in loyalty programs within the Danish grocery retail sector. This sector is well-prepared for digital innovation and faces growing needs for effective customer engagement methods, making it a perfect area for this research. Utilizing a mixedmethods approach, the research integrates primary data from surveys and interviews with secondary sources and literature reviews. Moreover, the study takes the design thinking approach, employing established frameworks, namely the Double Diamond and Desirability, Viability, and Feasibility frameworks, to guide that process and allow for a comprehensive exploration of implementing a unified blockchain-based loyalty program. The research identifies key stakeholders, including grocery retailers and customers, and explores their perceptions, challenges, and aspirations regarding existing loyalty programs and the proposed unified loyalty solution. Based on the combined findings of the analysis, the study suggests a conceptual blockchain-based solution to effectively address the identified challenges and meet the needs of both customers and retailers. Our findings indicate that: 1) The proposed unified grocery loyalty program is anchored in customer needs, holding a substantial promise to enhance customer engagement and satisfaction. In other words, the desirability aspect of the solution is met. 2) Blockchain technology effectively meets the underlying technical requirements to develop the proposed solution - in other words, the feasibility aspect of the solution is met. 3) Various business concerns, including concerns over customer data ownership, impediments in collaboration due to differing business strategies, and regulatory compliance, challenge the viability of the proposed solution. Therefore, the study concludes that the success of the proposed unified blockchain loyalty program is dependent on overcoming substantial viability concerns. Only through joint efforts of participating retailers can the envisioned benefits of a unified loyalty program be fully realized, ensuring that the program meets current customer demands and is beneficial to grocery retailers. Overall, this research contributes to understanding blockchain’s potential impact on customer loyalty initiatives in the grocery retail sector and provides valuable insights for practitioners, policymakers, and researchers seeking to navigate the complexities of blockchain adoption in loyalty program management.