Has the UPC outlived its usefulness?

Discussion
Getty Images/vchal
Mar 03, 2020
George Anderson

The vast majority of retailers and consumer brand companies will be ready to move on from the universal product code (UPC) in the near future, according to a research study from GS1 US.

Eighty-two percent of retailers and 92 percent of brands support transitioning from UPC to 2D barcodes, digital watermarks or radio frequency identification (RFID) in the next one to five years. The research found that, even though nearly 69 percent of retailers are currently using laser scanners that cannot read a 2D barcode, 84 percent are currently evaluating or planning to move to more advanced optical point-of-sale (POS) scanning tech that can.

Sixty percent of tier 1 retailers (annual sales $1 billion+) are planning on upgrading their POS infrastructure in the next 18 to 24 months. Retailers cite omnichannel initiatives and mobile POS requirements as the key factors driving these actions.

“The U.P.C. has served the industry well for more than 45 years. However, consumer and retailer demands for expanded product information require us to evolve our capabilities to support the emerging needs of modern commerce,” John Phillips, senior vice president, customer supply chain and go-to-market, PepsiCo, said in a statement. “Leveraging data-rich carriers will unlock a host of significant benefits for the consumer products industry and ultimately our multichannel customers, including enabling better consumer engagement opportunities.”

Today’s U.P.C. does not carry the additional information required to support future supply chain and customer needs,” said Dave Bornmann, senior vice president grocery and fresh, Publix Super Markets. “Before adopting a new data carrier, further considerations will be necessary to evaluate the return on investment from upgrading scanning equipment, enhancing supporting systems and the additional labor needed to collect and verify data.”

“This is complex, important work that the industry is undertaking. The magnitude of not only systems improvements but also change management requirements cannot be overstated,” said Mark Baum, chief collaboration officer, The Food Industry Association (FMI). “However, given the fundamental shifts in consumer behaviors and attitudes, we must work together to align the industry’s capabilities with what is needed to succeed in a rapidly changing marketplace.”

DISCUSSION QUESTIONS: How likely is UPC to be largely replaced by an alternative at retail within the next five years? What is the most likely replacement and what advances will it bring?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"Technology moves faster today but retailers are thrifty and will move slowly to replace what already works for them."
"this would be a huge investment in hardware to transition current POS scanners to probably a more expensive scanner to read a 2D barcode."
"Changing from a printed bar code to a printed 2D code isn’t worth the effort. RFID has had its fits and starts for decades."

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15 Comments on "Has the UPC outlived its usefulness?"


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Cathy Hotka
BrainTrust

If “69 percent of retailers are currently using laser scanners that cannot read a 2D barcode,” don’t expect widespread changes in the next five years. I’ll predict that we could be having this same discussion in 15 years.

Bob Amster
BrainTrust

Your are less optimistic than I am!

Cathy Hotka
BrainTrust

Hope you’re right, Bob!

Bob Amster
BrainTrust

I have personally experienced an unexplainable reluctance on the part of retailers to adopt and deploy item-level RFID technology. RFID technology, not new by any means, is the only current-day technology that is critical to omnichannel retailing. It’s very speedy in inventory and cycle counting, and more accurate than any other counting methods. Until there is a mass movement on the part of those reluctant retailers to embrace item-level RFID, the barcode will stay around. It should have happened five years ago and it didn’t. Maybe it will take another five years. Wake up retailers!

Bob Phibbs
BrainTrust

In my recent podcast interview with Michael Zakkour, he stated the QR code is making a huge comeback in Asia and predicts it will do so here as well due to the ease of use and rich data available to store using it. In his new book, New Retail: Born in China, Going Global he tells a story of being able to scan a QR code for King Crab and finding where it was caught, when, the name of the boat, every step along the way, pictures of certifications, how to cook it, and options to purchase; from simply having it wrapped to cooked for consumption on-premises, to getting it delivered.

Ralph Jacobson
BrainTrust

The challenge is where to go from here. There are international companies, worldwide standards (coordinated by GS1), and “mom and pop” manufacturers that are slow to adopt, and there’s the cost of all the equipment changes required along the supply chain all the way to the POS. Changing from a printed bar code to a printed 2D code isn’t worth the effort. RFID has had its fits and starts for decades.

Bottom line, I don’t see any massive changes for years to come.

Richard Hernandez
BrainTrust

I think it will be longer. Most pricing systems used by retailers are UPC based. Additionally, this would be a huge investment in hardware to transition current POS scanners to probably a more expensive scanner to read a 2D barcode.

Dave Bruno
BrainTrust

Widespread change in grocery is always slow. I worry that standards will suffer as the pace of adoption varies among the 69 percenters…

Ron Margulis
BrainTrust

It’s hard for me to believe that any new attempt at a standardized automated ID schema, whether it’s 2D barcodes, digital watermarks or RFID, won’t be leapfrogged by more accurate technology that will scan and track purchases at the shelf. I understand this may be a bit harder in eaches and random weight areas, but Amazon is proving this is more than just possible, it’s probable.

Ken Morris
BrainTrust

I think a shift like this is more complicated than a five year sunsetting timeline. There are too many small to midsize retailers leveraging the codes to make it feasible. I believe it will be 10 years before such a move could be made. Look at UPC adoption which started in supermarkets 45 years ago but really didn’t penetrate fully until 20 years ago. Technology moves faster today but retailers are thrifty and will move slowly to replace what already works for them.

Andrew Blatherwick
BrainTrust
The demands of modern multichannel retailing certainly require a more functionally rich and up-to-date form of communication than the UPC bar codes. However, achieving that is not so easy. I recall well over 25 years ago when RFID was tipped as the next revolutionary technology that we all got excited about and waited for the change to come and waited — and waited. The main reasons for not engaging RFID back then was the cost of the tags and the ineffectual readers, which missed almost as many movements as they measured. Not great in a retail environment. Today, the cost of RFID tags has fallen dramatically and will do so further with higher volumes, the readers are now pretty accurate with +99 percent read rates, so what is the difficulty? Well, the cost is still too high for most grocery items which is where the real volume comes from, and the cost of change is not low. There is also the problem of getting enough manufacturers to use them at the same time, which will… Read more »
dynamoo
Guest
6 months 21 days ago

Until Amazon stops requiring a UPC for third-party merchants to list product on their site, the UPC is here to stay.

Craig Sundstrom
Guest

“Nearly 69 percent of retailers are currently using laser scanners that cannot read a 2D barcode.” Enough said? (I guess not. For some reason, RFID seems to exert a magical quality as the “go to” third issue on slow days.) Anyway, here’s my thesis: everyone knows how to scan barcodes, and we’re not going to see a movement away from them as long as self-scanning/checking is still growing.

Ricardo Belmar
BrainTrust

There are just too many retailers entrenched with current barcode technology to be willing to undertake the massive effort required to migrate to something that is, at the end of the day, an incremental improvement. I suspect that we will need something more revolutionary rather than evolutionary — as the barcode was originally — to entice retailers in large enough numbers to migrate. We may be waiting more than 5 years!

Harley Feldman
BrainTrust
Deciding which is the best scanning technology is the wrong issue to focus on. The real value of the collected data is magnified when the product code is married with the product attributes like price, time on shelf, expiration, source, etc. Adding all of these attributes to the product label is difficult, expensive or impossible in the case of UPC Codes. Consider the product identification as a license plate to the remainder of the attribute data accessible quickly and cheaply from the Cloud. It does not matter which technology is used to scan and collect the product identification. Used this way, retailers will not be forced to convert their scanning systems to reference the latest attribute data. The retailer can evolve from UPC Codes to QR codes to RFID at a pace they can afford and get value from along the way. In the long run, RFID is the best technology since it is wireless and does not need to be scanned in optically straight on. The major obstacle to RFID is the cost of… Read more »
wpDiscuz
Braintrust
"Technology moves faster today but retailers are thrifty and will move slowly to replace what already works for them."
"this would be a huge investment in hardware to transition current POS scanners to probably a more expensive scanner to read a 2D barcode."
"Changing from a printed bar code to a printed 2D code isn’t worth the effort. RFID has had its fits and starts for decades."

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