The retail industry is grappling with an escalating challenge of theft, a pervasive issue that has ballooned into nearly a $100 billion problem. Companies ranging from mass-market giants like Walmart to specialized retailers such as Target have sounded the alarm, highlighting what many describe as an epidemic of retail shrink. In response to this pressing concern, Lowe’s Cos. Inc. has launched an innovative initiative, ‘Project Unlock,’ designed to deter criminals without compromising the shopping experience for legitimate customers.
Traditionally, the primary response to surging theft, particularly from organized groups, has been to secure high-value merchandise behind locked gates or under lock-and-key. While these measures offer a degree of protection, they often create a ‘locked-down store experience’ that frustrates shoppers and can even lead to reduced sales, as experts have noted. Lowe’s itself has experienced an uptick in both general and ‘brazen theft,’ where criminals exhibit little fear of confrontation, posing safety risks to employees and customers alike.
Recognizing the limitations of conventional security, Lowe’s Innovation Labs, the company’s dedicated technology hub, has been at the forefront of developing alternative solutions. Josh Shabtai, Lowe’s Innovation Labs senior director of ecosystem, articulated the inherent conflict: “Putting more of these hurdles in stores makes it harder to sell things, but it makes it difficult for customers to not feel like they are in a super-maximum prison area.” Project Unlock represents a pivot towards a tech-driven approach that aims to be “virtually invisible to retail customers” while making stolen goods inoperable.
At its core, Project Unlock is a proof-of-concept system that leverages two distinct yet interconnected technological components: Radio Frequency Identity (RFID) chips for point-of-sale product activation and blockchain technology for transparent purchase records. This initiative, developed over approximately three years by about 50 employees at Lowe’s Innovation Labs, has undergone initial piloting in six stores, encompassing more than 600 power tools, which are frequently targeted due to their high value and ease of resale.
The first critical component, point-of-sale product activation, directly addresses the usability of stolen items. Under Project Unlock, power tools are embedded with low-cost RFID chips by manufacturers, each carrying a unique serial number that is also printed on the product’s barcode. Crucially, these products are manufactured in an inoperable state. The activation process occurs seamlessly at checkout: when a customer pays for the item, a point-of-sale RFID scanner reads the chip, verifies the serial number, and writes a unique secret key value that activates the tool for legitimate use.
This mechanism ensures that “only products that are legitimately purchased are activated.” Consequently, if a power tool is stolen from Lowe’s without going through the proper checkout and activation process, it simply will not work. This fundamental design objective—rendering stolen goods functionally worthless—is intended to significantly reduce the incentive for theft. Seemantini Godbole, Lowe’s Chief Digital and Information Officer, stated, “If a power tool is stolen, it won’t work, which makes it less valuable to steal.” She further expressed the expectation that “word will spread pretty quickly that stealing these tools this way is not worth it because it’ll never work.”
The choice of RFID technology was strategic, driven by its cost-effectiveness and efficiency. RFID chips are significantly less expensive, typically costing less than $1 per chip, compared to Bluetooth technology, which could range from $3 to $6. This cost differential is vital, as Lowe’s aims to avoid considerably increasing the product’s price, a burden that would likely fall on manufacturers or consumers. Furthermore, RFID is low-powered, mitigating concerns about battery life that would accompany Bluetooth solutions.
The process is designed to be entirely frictionless for the legitimate customer, mirroring the experience of activating a gift card. As Ms. Godbole explained, customers “don’t do anything different,” and the entire process is “invisible for the customer,” who “should not even know that there’s anything extra happening.” This commitment to a seamless customer experience distinguishes Project Unlock from more intrusive security measures that have become common across the retail landscape.
The second cornerstone of Project Unlock is the implementation of transparent purchase records utilizing blockchain technology. While point-of-sale activation deters immediate use, a stolen, deactivated tool could still theoretically be resold to an unsuspecting buyer. To counteract this, every legitimate product purchase is recorded on a blockchain-encrypted ledger. This system creates a “secure publicly accessible anonymized record of authentic product purchases,” where only the product’s serial number is recorded, with no personal customer data.
This blockchain record offers a robust mechanism for verifying product legitimacy. It is intended to be accessible to various stakeholders, including retailers, manufacturers, law enforcement agencies, and even individual consumers. For instance, if a thief attempts to resell a stolen, deactivated power tool on a third-party marketplace, potential buyers can consult this public record to confirm the product’s authenticity and ensure they are not inadvertently purchasing stolen goods. This also facilitates validation by marketplaces themselves, enabling them to prevent unauthorized sales.
The broader industry context underscores the urgency of such innovations. The National Retail Federation (NRF) reported that organized retail crime increased by 26.5% in 2021, costing the industry almost $100 billion. Moreover, 81.2% of retailers noted an increase in violence and aggression associated with organized retail crime in the past year. This escalating threat has driven many retailers to adopt extreme measures, from locking up canned drinks at Walmart to requiring employee assistance for purchasing vitamin bottles, reflecting a paradigm shift away from simpler shopping experiences.
While Lowe’s is at the forefront of this specific implementation, the concept of point-of-sale tool activation is not entirely novel. Home Depot, for example, announced plans for a similar system involving Bluetooth technology in 2019 and again in mid-2021. However, as of January 2023, there has been no indication that Home Depot has fully implemented such a system, positioning Lowe’s Project Unlock as a significant step forward in tangible deployment and testing.
Despite the promising aspects of Project Unlock, the initiative also faces certain challenges and complexities, particularly concerning the widespread adoption of its blockchain component. Gene Zelek, senior council at Taft Law, specializing in antitrust and pricing litigation, raised several pertinent questions. He described the concept as “cumbersome” and expressed concerns that “you are ultimately going to have upset customers who can’t figure out why their tool doesn’t work that they paid for.” This could lead to an increase in warranty claims directed at marketplaces or manufacturers, potentially shifting the burden of customer service issues.
Zelek also highlighted the potential reluctance of large online marketplaces to fully embrace product verification, noting that many either do not verify goods or do so only on an ad-hoc or fee-based system. He cited Amazon’s “random stow” or commingling practices in its Fulfillment by Amazon (FBA) services, where legitimate and potentially stolen or counterfeit goods with the same SKU could be stored together. In such scenarios, if a customer purchases a legitimate drill but receives a stolen, deactivated one, the manufacturer or marketplace would likely bear the brunt of resolving the issue.
Such logistical complexities could make it challenging to gain full buy-in from tool manufacturers, who might view merchandise security as primarily the retailer’s responsibility. As of now, Lowe’s has not publicly announced specific tool manufacturers that have officially committed to embedding RFID chips into their products for Project Unlock. The successful scaling of this initiative hinges on broad industry collaboration, a point Lowe’s readily acknowledges.
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However, Lowe’s leadership remains optimistic about the long-term potential of Project Unlock. Seemantini Godbole emphasized that the system is not intended to replace asset protection teams but rather to help them “combat this [organized retail crime] more effectively” by making the retail environment safer for associates and customers alike. The company firmly believes that there are “better ways to curb theft than locking products down” and that technology offers a path forward that aligns with a positive customer experience.
Lowe’s has also made it clear that this initiative is not just about its own stores; it envisions a future where such capabilities could benefit the “entire retail ecosystem.” Shabtai noted, “The aim is to have larger industry conversation.” He added, “If we develop it, we have something we can make available. It’s a lot easier to have a conversation when you have the technology product, not a theory.” The blockchain aspect, being an open, distributed ledger, is seen as particularly suitable for industry-wide adoption, as it is not owned by a single retailer, allowing all products to be registered transparently.
In essence, Project Unlock represents Lowe’s proactive stance in a changing retail landscape, demonstrating a commitment to innovation as a means of addressing deeply entrenched problems. While acknowledging that it may not be “the perfect solution” to solve all theft and fraud issues, it serves as a powerful testament to the belief that technology can create “a great environment for our customers” and make retail safer and more efficient. As the retail sector continues to navigate the complexities of organized crime and customer expectations, Lowe’s initiative could well be a blueprint for a more secure and seamless shopping future for everyone involved.
This forward-thinking approach from Lowe’s also aligns with broader legislative efforts aimed at combating retail crime, such as the Combatting Organized Retail Crime Act and the INFORM Consumers Act. These legislative pushes seek to foster greater collaboration between law enforcement and businesses and to increase accountability for high-volume third-party sellers on online marketplaces. Such synergies between technological innovation and policy reform may ultimately provide the comprehensive solutions needed to safeguard the retail industry from this persistent threat.
