Has the UPC Outlived its Usefulness?  

By 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?

Comments from the RetailWire 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 Amster, Principal, Retail Technology Group

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.
Ralph Jacobson, Global Retail & CPG Sales Strategist, IBM

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 five years!
Ricardo Belmar, Sr Director, Retail Transformation Specialist, Infovista

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.
Ron Margulis, Managing Director, RAM Communications

Read the entire story and RetailWire discussion at http://bit.ly/2wR3D5s

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                                                                         Mid-March 2020
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