Smarter barcodes are coming to a store near you

Discussion
Source: GS1 US video
Feb 11, 2022

Automatic identification and data capture technology is about to experience a dramatic expansion, and retailers will want to know how best to take advantage of the change.

By 2027, the traditional Universal Product Codes (UPCs) that we all know and love are set to transition to a two-dimensional (2D) barcode or QR code that can store much more data on packaging. The move, made in large part due to a consumer demand for additional information about the products they buy, is being shepherded by GS1 US, which recently launched a test kit to help retailers make the change.

The kit, part of GS1’s Sunrise 2027 program, evaluates a company’s ability to capture QR codes at all transaction points (point of sale, receiving, dispatch, etc.). The program is designed to help retailers and brands ensure there are minimal challenges in the transition to 2D barcode scanning.

The benefits expected from the move to 2D barcode scanning include simplification of retail messaging, improved inventory management, greater sustainability in ethical sourcing practices and better product authentication and greater brand trust. The new codes also give retailers the ability to analyze the data for many use cases, including discounting, confirming expiration dates, checking lot codes so recalled products don’t leave the store and connecting to loyalty programs.

“CPG suppliers also have recognized that consumers are looking to them for more in-depth information on their products. Digital access to dynamic, current information is imperative for the consumer — 2D barcodes are the gateway to delivering the next level of information, as the traditional UPC simply can’t deliver what the current day consumer is looking for,” said Carrie Wilkie, senior vice president, standards & technology at GS1 US.

GS1 US recently ran a pilot with three national retailers and their solution providers to assess readiness. Based on its results, POS systems need to be transformed to process 2D barcodes, interpret new data and maintain efficient checkout. Although retailers in the test had installed image scanners, testing showed various readiness issues in successfully scanning, processing and storing data. Retailers will need to upgrade their hardware and software infrastructure across all POS formats in order to scan, read and ingest the data.

“While the transition to 2D barcodes is still in its infancy, we understand that benefits around sustainability, traceability, supply chain visibility and meeting the needs of consumers are creating a great deal of interest across industry,” said Marcia Mendez, senior program manager at Walmart.

DISCUSSION QUESTIONS: What impact will the transition to 2D scanning have on retailers and brands? How will the technology best serve to differentiate the retail offering to shoppers?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"This is an opportunity with ample potential for everyone involved - retailers, suppliers, distributors, consumers."
"The greatest impact will be in opening a new channel to communicate with consumers."
"The 2D technology will definitely the ability for companies to have access to more data but, as with RFID codes, the transition will be rocky."

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16 Comments on "Smarter barcodes are coming to a store near you"


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David Naumann
BrainTrust

2D barcodes will bring many benefits to retailers and consumers, but it will also bring some challenges. Transitioning to 2D barcodes will require retailers to update scanners and map the additional data to inventory management systems and any other system that leverages product details. This transition will require investments from retailers, but the benefits should justify the expense.

Bob Amster
BrainTrust

Retailers will read the 2D codes when taking inventory, when receiving or returning inventory to stock and when selling the product. All these functions can be performed with the now-traditional UPC barcodes. On the other hand, the consumer can benefit from 2D barcodes because 2D – holding more data per square inch of surface – can provide to any consumer with a smartphone additional product information, links to a website with more information, and lot number information in addition to all the things that UPC barcodes provided each consumer before (speed at checkout and returns). The consumer will be better served.

Ken Morris
BrainTrust

The greatest impact will be in opening a new channel to communicate with consumers. Once 5G gains a wider footprint, this means retailers will have the ability to show videos on the spot. Or will it be the retailer’s channel or the CPG company’s channel that “owns” the QR code on the package? Are we looking at slotting allowances 2.0?

As for supply chain, inventory, and stocking value: not so much. The 2D barcodes will be like introducing an upgraded fax machine. They will still require line of sight for scanning, while RFID chips can be scanned from a distance and in bulk.

David Weinand
BrainTrust

This is exciting news. The long-beleaguered QR code has hit prime time. The ability to use the codes at the consumer level is exciting as transparency is becoming imperative in the industry. Obviously, the fact that retailers will have MORE data raises the question of whether they will have the capability to fully take advantage of it. Most aren’t mature enough to use the product and shopper data they currently have. That said, I think it is a good move and will offer advantages for both retailers and shoppers.

David Spear
BrainTrust

Like with any major industry technology standards change, there will be significant impact across a variety of use cases, many of which will deliver incredible benefits to consumers, retailers, and vendors. Certainly, the consumer wins by having access to much more information about a product (think shelf-life, agri-stats, sustainability), but I think the biggest area of opportunity is in the back-end supply chain, where data provenance and the ability to track/trace become easier. This opens up a whole new era of transparency for all stakeholders, which will unleash a tidal wave of new innovation in the retail industry.

Doug Garnett
BrainTrust

A smart step forward that is also unlikely to make much difference to customers.

Richard Hernandez
BrainTrust
Richard Hernandez
Director of Commerce
7 months 25 days ago

I am all for more data to make more decisions. Currently, if a barcode does not scan (background color, damaged code, etc)., there are human-readable numbers to enter manually to bring up the retail price, item data, etc. I don’t see any human-readable numbers on this barcode, so how would you ring this item up at the checkstand?

Also as mentioned, there will have to be a lot of money spent on upgrading POS systems to be able to read these 2D barcodes.

Dave Bruno
BrainTrust

I suspect I may not have enough knowledge to offer an informed opinion on what I am about to suggest, but it seems to me that we’d be better served by investing in understanding what it would take to transition to RFID tags (or possibly NFC) versus transitioning to QR codes. I know enough to know that there are cost and application challenges inherent in both but QR codes, as robust as they may be, still have what I believe is a fatal flaw: they still require a scan. RFID and NFC tags (albeit with range limitations inherent in NFC) don’t require scans, and pushing us to solve the issues and transition to them would bring so many additional benefits. I hate to take an incremental step when so much more potential is available.

Carrie Wilkie
Guest
7 months 24 days ago

This is a great challenge to pose, Dave. RFID, NFC and other data carriers are absolutely in scope as we look at the evolution from the traditional UPC barcode and what comes next. We started this work at GS1 US under the name “Beyond the U.P.C.” because we’re in an era where the technology is evolving quickly and different data carriers are suited to different use cases. Our hope is that we can evolve retail and distribution systems to allow for carrier choice based on product types, use cases, etc. UPC barcodes have been the favored workhorse for decades, but I don’t think we’ll see another data carrier with such longevity. Feel free to check out our research and keep contributing to the conversation!

Melissa Minkow
BrainTrust

There’s been a lot of discussion surrounding CPG brands’ inability to collect consumer data now that regulations are more strict. 2D barcodes could potentially solve for this issue. This is an opportunity with ample potential for everyone involved- retailers, suppliers, distributors, consumers. Exciting that we’re actually welcoming of it and ready for it now.

Gene Detroyer
BrainTrust

2027? Hmmm? Many retailers and consumers in China are already using information promised in 2027.

You want to buy fish? Scan the code and it will tell you where and when it was caught. Hmmm?

Ryan Mathews
BrainTrust

Before we can answer this question we have to ask a couple of prior questions: Do consumers really want more information about products? And, if you think the answer is yes, exactly what information are consumers asking for? And, finally, are consumers willing to take branders’ word for the accuracy of their claims?

2D scanning clearly has significant potential, but for whom? What consumer need or needs – as expressed by real consumers, not marketers selling technology – will 2D barcodes address? If these consumer demands are, in fact, “imperative,” why aren’t they being addressed today? Why wait five years? Sustainability is a great example. Yes, consumers say that information is important to them, but there is no indication that a lack of it has any significant negative impact on mass sales.

Camille P. Schuster, PhD.
BrainTrust

Transitioning to a new technology will be a big ask as many companies need to upgrade their logistics and inventory software and hardware. The 2D technology will definitely the ability for companies to have access to more data but, as with RFID codes, the transition will be rocky.

Mark Price
BrainTrust

Given consumer demand for accurate, real-time data on their orders, this technology has the capability to meet those needs. At the same time, the advanced supply chain analytics will help to reduce stockouts, theft, and product confusion that retailers often face despite using their current information to the best of their abilities.

The ability to use these barcodes for improved customer experience in terms of loyalty programs and customer care can provide the additional foundation to improve customer engagement at the ground level and trust.

Kenneth Leung
BrainTrust

Consumers are already used to 2D bar codes in the form of QR Codes. Using it on packaging will be a natural extension, as long as the scanners in the store can keep up. I expect it will take a long transition from 2D to 3D given the number of legacy POS scanners out there. Manufacturers, retailers and consumers can get more information about the product via the code which will improve customer experience.

Oliver Guy
BrainTrust

Traditional brands are seeking to build direct relationships with consumers to emulate what many new digital native brands have achieved. Barcode technology could become another tool that aids this.

This technology could well provide information to consumers such as more detailed provenance of products, environmental footprint, nutritional data and many other data. For the brands, providing this detailed information in return for information about consumers could be a significant step in building a relationship and creating offers that are curated for an individual.

wpDiscuz
Braintrust
"This is an opportunity with ample potential for everyone involved - retailers, suppliers, distributors, consumers."
"The greatest impact will be in opening a new channel to communicate with consumers."
"The 2D technology will definitely the ability for companies to have access to more data but, as with RFID codes, the transition will be rocky."

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