It’s hard to believe that the invention of the UPC — first used by railroads almost 100 years ago and then introduced to speed grocery checkout lines back in 1974 — hasn’t changed. Groundbreaking at the time, but now sorely outdated, UPCs are finally getting a facelift and moving into the 21st century thanks to the GS1 Sunrise 2027 initiative.
Get ready, get excited, retailers and customers alike, the 2D barcode, a compact square label with splotches and spaces that encode up to 350X more data than a traditional UPC (4,000 characters) will have a significant impact on managing the business and delivering better customer experiences. Consumers want more information about the products they buy, and retailers want more visibility into the products their customers buy. Who doesn’t want that?
QR codes, which were first put in magazines and catalogs back in the 2010s and were invented 30 years ago, did not catch fire with customers. A type of 2D barcode, QR codes became more common during the pandemic, but moved the needle only so much. What’s different is the UPC is being replaced by a 2D barcode on the product itself.
Another UPC alternative, RFID, which first made waves in retail 10+ years ago, has also had a slower adoption, largely because of cost and implementation hurdles, despite its having similar benefits, specifically to track and manage inventory and enabling checkout-less “just walk out” transactions.
Walmart mandated that its suppliers put it on products by 2022, which has made a big impact on RFID adoption. And in 2014, Inditex SA, which owns fast-fashion giant Zara, implemented RFID to effectively track all its products at every step in the process. It had tremendous benefits because it put the product in the right place at the right time, increasing full-price sales. A number of major retailers have had some form of adoption because of its ability to materially improve inventory management, but it hasn’t offered the same benefit to the customer experience.
Giving Customers More of What They Want
By contrast, the new 2D barcodes bring the ability to marry the physical and digital worlds, allowing brands and retailers alike to create nuanced customer experiences. For example, a customer can scan a 2D barcode on a package of pasta sauce and instantly view ingredients, allergens, recipes and promotions.
Additionally, as consumers demand more transparency from the brands they purchase from, retailers can use these codes as an opportunity to share information on a product’s origin. For example, a clothing brand can include information on its sustainable sourcing practices, link to a video spotlighting the labor conditions for its garment workers or share details of how it reinvests in the communities in which it operates.
The first company to use 2D barcodes in U.S. stores is Puma. The barcode goes to a link that shares details about Puma’s sustainability efforts and what materials are in a given product. Beyond easier access to product information, because of the inventory management benefits consumers can also be more assured that the product they want is available at the time they want to buy it.
Brands can include a number of features in a 2D barcode that can help improve and ease access to customer service. For example, a customer shopping for jeans could stop at a display that features a sign reading “Need Help?” alongside a large QR code. When scanned, the QR code provides the shopper with detailed information such as care instructions, or connects them with a customer service agent who can arrange to have the correct size shipped directly to the shopper. Viewers can scan a QR code in an ad to access detailed product information, or a new user can instantly access product manuals by scanning a QR code on the box or even on the product itself.
QR codes can also connect customers directly to a customer service chatbot or virtual assistant. Once customers scan the code, they can be redirected to a chat interface where they can ask questions, seek support or request assistance. For example, a hotel could equip every room with a unique barcode that allows a guest to order room service, request additional towels, schedule a wakeup call and other activities without having to wait for a human to become available. Doesn’t that sound amazing?!
Giving Retailers More of What They Need
2D barcodes will have an immediate impact on visibility and management of inventory and, as a result, will reduce markdowns while also enabling quicker resolution of recall items. For example, Australian grocery giant Woolworths is using 2D barcodes to enhance food safety and cut down on food waste. The grocer has enabled many perishable items with the enhanced codes to include information on food expiration dates, which can alert team members when that date is approaching and offer a discount to sell the product rather than toss it.
The same information can alert a checker if a scanned item has expired or been recalled, avoiding potential illness and reputational harm to the grocer and producer. In Japan, one retailer is already using 2D barcodes to give discounts on foods with three or fewer days of shelf life remaining.
QR codes also can be linked to a brand’s social media profiles, encouraging customers to follow the brand and stay connected. By scanning the QR code, consumers can instantly access these pages, where they can stay updated on new products, promotions or participate in contests and giveaways. “2D barcodes on products will be an important new gateway to digital experiences,” said Kelly Schlafman, Director of Intelligent Packaging at P&G. “We are living in the age of the informed consumer — the explosion of digital access to content is a key element to remain competitive.”
Retailers also can leverage these codes to deliver mobile marketing and offer services such as loyalty points, rewards, exclusive coupons and interactive games, to foster stronger connections with the brand that ultimately drive loyalty.
QR codes can be used to gather customer feedback or conduct surveys. By scanning the code, customers can access a form or portal where they can provide their opinions, suggestions or report an issue. This allows companies to collect valuable insights directly from customers, enabling them to improve their products, services and overall customer experience. After all, every retailer strives to listen closely to their customers and create the frictionless experiences that keep them coming back.
50 years ago, UPC barcodes transformed the retail landscape. With the advent of 2D barcodes like DataMatrix and QR codes, retailers and brands alike will be able to better serve consumers and enhance the customer experience through real-time, interactive, personalized engagement. A true win-win!
Shannon Flanagan is VP of Global Strategy at Talkdesk. She has been retailing since college, both in stores and as a buyer, merchant, consultant, sales leader and strategist. She’s been an executive with Gap, Lands’ End and Macy’s, defining and managing strategic initiatives with expertise in omnichannel transformation. She has also worked with hyper-growth and Fortune 500 companies during her time with Accenture, Infor and Slalom.