The Current, delivered daily.
A new dimension is coming to the UPC barcode.
UPCs are a fixture on product packaging, and a key tool in the supply chain. Invented in the 1970s by grocers who wanted a way to track items across multiple retailers, the tags have largely stayed the same since, even as the technology used by retailers and consumers evolved.
That’s about to change.
Two dimensional barcodes are poised to offer the content and visibility that meets today’s expectations from brands and retailers, and data that will power future innovation and regulation alike. Over the last five years, the standards organization GS1 US has worked to introduce 2D barcodes through research and collaboration with industry leaders alike.
The industry set a goal of 2027 to bring this transition to the checkout aisle. Through the campaign Sunrise 2027, GS1 US is educating and preparing organizations for this change.
To learn more about how the 2D barcode will transform packaging, The Current sat down at the NRF Big Show to speak with Carrie Wilkie, the SVP of Standards and Technology at GS1 US. The following interview was lightly edited for length and clarity.
The Current: What is Sunrise 2027, and what is set to occur at that date?
Carrie Wilkie: The evolution from the one dimensional UPC barcode that we know and love and has served us well for over 50 years, to two-dimensional (2D) barcodes on product packaging. The specific goal with Sunrise 2027 is to ensure that retailers can read a two dimensional barcode at the point of sale. Brands at that point can start to transition away from the 1D carrier, if they choose, to exclusively have a 2D data carrier on their package.
The beautiful thing that enables is a whole lot of value added services for everybody in the supply chain. Think about a case where maybe you don't leave a grocery store with a recall product, or you don't leave a grocery store with an expired product. At the pharmacy, maybe you've got some sensitivities that something in the product is going to set off. Over and above that is decluttering the package. So as a consumer, there's one thing we can scan, and a whole lot more information than could ever fit on our product label, but we're not confused about what we're scanning and why we're scanning it. 2027 is the target date when every retailer around the world can scan and read those 2D barcodes.
Let’s break down how two dimensional barcodes work. How will it change the UPC barcode that we know today?
Today, UPC barcodes are one dimensional. All we can put in a UPC barcode is numbers. Typically, in the US, we say that in the form of 12 digits. In Europe, we see 13 digits, but it doesn't give you as a consumer any information about that product. There are different websites where you can do product lookups. A two-dimensional barcode gives you the ability to encode a lot of data into a standardized data carrier.
Most of us, especially with the pandemic, are now familiar with QR codes. We're scanning them for just about everything. You go to your favorite restaurant, and the menu now is a QR code. So you're doing that interaction with your phone, by moving that on to the consumer package where they believe the same thing. And so we're getting all of that additional data that you can encode in the standard way, which means the retailer can read it at point of sale. It means the distributor can read it, and pull out all of those different capabilities that we talked about. Over and above all of that, there can be links to so much more information contained within that barcode that can be enabled either through a scan with your phone with menus, a retailer app, a brand app or a royalty app that unlocks even more possibilities that just simply can't happen with a one-dimensional barcode that only holds 12 or 13 digits.
Looking beyond the retail and consumer level, how will the shift to the two-dimensional barcode bring change deeper in the supply chain?
There are many regulatory pieces around traceability, sustainability and food safety. From a regulatory perspective, it’s valuable to be able to trace products and the footprint. They want to know what materials went into it, and whether they shipped via a rail or trucks, as well as how they moved. Imagine being able to scan a 2D barcode and see not only information about the product itself, but information about its carbon footprint, and then to be able to supplement that by saying, "I want to buy a carbon offset because of this product." There are many use cases that benefit the brand and benefit regulators that start to unlock a lot of possibilities.
Within the industry, what will it take to bring the shift to 2D about?
We started talking about this in 2018. We've spent the last couple of years doing lab research to prove that it's possible, and we've just completed the last round of testing. The research is telling us that it's possible. At first, there was a fear that everybody would have to replace all of the hardware in their stores at massive cost. Guess what? That really isn't going to happen. With infrastructure upgrades being made over the last couple of years, the vast majority of retailers – and anywhere that barcodes are scanned – have the hardware to be able to do that. We did discover the software needed updates. It was great that we discovered that in a lab before things are out in the market. The software providers pivoted quickly and made those updates.
The biggest thing for the retailers is going to be the ability to enable value added services. This includes on-demand discounting based on common products.
The big thing now is releasing real products in market. Testing is great, but it's a controlled environment. It's a robotic arm, it's perfect lighting. In a store, there are consumers. There are cashiers working in the checkout lane. There is lighting. We are testing how all of those factor in and make sure this is usable in the market.
For brands, we know that the currently-in-use one-dimensional UPC barcodes are commonly used in loyalty campaigns. What other uses will two-dimensional barcodes open up?
Two-dimensional barcodes give the brand more of an opportunity to tell their brand story about the product. Adding information provides the ability to tell stories, and that experience can be dynamic. Brands will be able to change content based on the season or based on geolocation. That will provide a different level of engagement that brands can bring to consumers and retailers. Then, anytime you scan a QR code, you're giving up a little bit. They're gleaning that information as well. So it really gives them an opportunity to tell a more robust story to their consumers.
Trending in Operations
Campbell Soup Company CEO Mark Clouse offered thoughts on messaging amid inflationary shifts in consumer behavior.
After months of elevated inflation and interest rate hikes that have the potential to cool demand, consumers are showing more signs of shifting behavior.
It’s showing up in retail sales data, but there’s also evidence in the observations of the brands responsible for grocery store staples.
The latest example came this week from Campbell Soup Company. CEO Mark Clouse told analysts that the consumer continues to be “resilient” despite continued price increases on food, but found that “consumers are beginning to feel that pressure” as time goes on.
This shows up in the categories they are buying. Overall, Clouse said Campbell sees a shift toward shelf-stable items, and away from more expensive prepared foods.
There is also change in when they make purchases. People are buying more at the beginning of the month. That’s because they are stretching paychecks as long as possible.
These shifts change how the company is communicating with consumers.
Clouse said the changes in behavior are an opportunity to “focus on value within our messaging without necessarily having to chase pricing all the way down.”
“No question that it's important that we protect affordability and that we make that relevant in the categories that we're in," Clouse said. "But I also think there's a lot of ways to frame value in different ways, right?”
A meal cooked with condensed soup may be cheaper than picking up a frozen item or ordering out. Consumers just need a reminder. Even within Campbell’s own portfolio, the company can elevate brands that have more value now, even if they may not always get the limelight.
The open question is whether the shift in behavior will begin to show up in the results of the companies that have raised prices. Campbell’s overall net sales grew 5% for the quarter ended April 30, while gross profit margins held steady around 30%. But the category-level results were more uneven. U.S. soup sales declined 11%, though the company said that was owed to comparisons with the quarter when supply chains reopened a year ago and expressed confidence that the category is seeing a longer-term resurgence as more people cook at home following the pandemic. Snacks, which includes Goldfish and Pepperidge Farm, were up 12% And while net sales increased overall, the amount of products people are buying is declining. Volumes were down 7%.
These are trends happening across the grocery store. Campbell is continuing to compete. It is leading with iconic brands, and a host of different ways to consume them. It is following that up with innovation that makes the products stand out. Then, it is driving home messaging that shows consumers how to fit the products into their lives, and even their tightening spending plans.
Campbell Soup is more than 150 years old, and has seen plenty of difficult economic environments. It is also a different business today, and will continue to evolve. At the end of the day, continued execution is what’s required.
“If it's good food, people are going to buy it, especially if it's a great value,” Clouse said.