The Barcode (R)evolution: both retailers and customers win
By Kasper Kwant en Olaf Zwijnenburg, published on november 3, 2020, 07:20
Our new version of the ancient 1D barcode can do everything that global market leader GS1 is now launching with the QR code they have called 2D barcode.
Our 'enhanced' barcode can do everything the 2D barcode can, and much more .....
And the best thing? The 'enhanced' barcode can be scanned by any existing POS system as well as by any mobile phone.
Want to know more? Read our blog!
To further illustrate the content of this article, we have created a "live example" that shows the benefits of the new technology. The example below shows the journey of a vegetable basket in 5 steps from grower to retailer - all based on 1 unique constant barcode per unique product!
Technology plays an important role in the retail sector. New technologies are under development and existing technologies reinvented constantly. One of the places where innovation takes place is the Future Store Arnhem, where, amongst others, the good old barcode is being redeveloped. With regards to the barcode, it is more a matter of evolution than revolution. A revolution often results in winners and losers. In this evolution case, there are only winners. Both customers and retailers win, while chances arise though out the value chain.
The barcode is a relatively old technology that was developed mid-20th century. There are different standards, but the common denominator is that they all consists of bars. Each of the bars stands for a number. The EAN 13 – short for European Article Numbering – consists of a 13-figure code. The barcode is commonly used in keeping track of stocks and facilitating easy and quick processing at cash registers.
The old barcode technology currently is being redeveloped. The innovation focuses not so much on the barcode itself but more on the information systems that are interconnected with the barcode technology.
The figure below lists the advantages of the new technology, which will be elaborated on later.
Adding more and more information
There is no lack of information regarding any specific product. Where is it produced? By whom? Which ingredients or parts are being used? Have certain pesticides been used in production of food items? When was the product shipped? When did in arrive in the distribution centre or shop? These are just a few examples, the full list of data points is considerably longer.
That information may be of interest to multiple stakeholders. First of all to facilitate a seamless value chain. Every link in the chain, be it producer, transporter, wholesaler or retailer, requires information from the previous link and will need to provide the off-taker with the necessary information as well. This allows every party in the chain to do its work and allows the value chain to operate effectively and efficiently. Also the consumer has an interest in more information on a product. What is the nutritional value? Does the product contain allergens or is it produced in a factory where it could be contaminated with allergens? Has the product been produced environmentally friendly and with respect to all labour conditions?
The current barcode captures only a very limited set of information. With the new technology each party in the value chain can store additional information with regards to the specific product. That information can be made available through the barcode.
Producers may add information about raw materials being used, weight, quality, production method, et cetera. Transporters can enrich the data-set with shipping information like transport method or arrival dates. Subsequently, retailers add for example consumer price information to the list.
Making information more accessible
The underlying system may hold much more information on a product, but if that information is not easily accessible, its value will be limited.
The traditional barcode is only readable with a barcode-scanner. The new technology will make reading the codes lots easier. Rather than reading the small print on a product label, customers may use their smart phone to scan the barcode and retrieve much more information on the product – even without needing to download a special app.
Retailers on the other hand can link the information contained in the barcode to their screens and other digital signings directly.
Sharing information is not only reserved for customers. Also within the value chain, information can be shared more easily, allowing for better insights. Retailers can track stock levels at producers and wholesalers. This allows (risk) management of stocks throughout the chain, instead of each party optimizing their own stock levels. This can result in lower overall stock keeping, higher rotation rates and better margins.
Making information more reliable
Current technologies only provide limited insights in the reliability of stored information on products. Is the information provided by producers on for example production methods still correct? Or has this been changed in a later stage?
The new technology will be using blockchain technology to validate and warrant the information. All partners in the supply chain can add data to the blockchain, but no one is able to change information uploaded earlier.
That means the data on production methods or applied raw materials cannot be altered afterwards. The blockchain will refuse that. It will no longer be possible to tamper the information, which assures customers that the information on their smartphone is by definition correct.
‘Dynamic pricing’: a dream come true
In many sectors ‘dynamic pricing’ is common practise. The travel- and hotel-industries have been applying dynamic prices already for years. But examples are also found in more trade-related sectors. Strawberries and flowers at the wet market are typically much cheaper just before closing than in the morning. And what about petrol being more expensive between commuting hours than afterwards? There are many more possibilities that currently are only partly addressed.
According to research by McKinsey, a better use of the dynamic pricing instrument could boost sales by some 2 to 5 percent and margins by 5 to 10 percent. Tying price to location is such opportunity; adjusting the price of a product to local market circumstances and price levels of competitors in the direct vicinity. In addition, supermarkets may drop prices when products are nearing their ‘best before’ date. That ‘price rule’ is stored in the information system and the customer may see a different price at different moments.
A next step could be personal pricing on the basis of facial recognition in the shop. Or rising the price of umbrellas when it rains. Such ‘price rule’ is added to the information system, the systems tracks weather reports and adjust prices automatically. The customer sees the price that fits with the current weather circumstances on his smartphone.
These are only a few, relatively simple examples. In practise the possibilities are nearly endless. Making the most of dynamic pricing currently is being frustrated by very practical issues. It is quite laboursome to continuously adjust prices in physical stores. New price tags or stickers are required every time the price changes.
Also in these instances this new technology provides a solution. Rather than on the product or shelf itself, the price information is stored in the underlying information system and always accessible via the barcode. Also for customers, who can scan the code with their phones.
The advantages of dynamic pricing are clear: less food waste, more choice for the customer and a better margin for the retailer. Thanks to the new technology these benefits are easier to be realised.
New technology widely deployable
The new technology is deployable in a wide spectrum within the retail sector.
There are two important criteria for application:
- retailers need to benefit; for example by means of dynamic pricing or managing stocks better
- it needs to be relevant for consumers; as they would like more information on products made available easier
A substantial part of the food sector matches both criteria. Shelf life and food waste are important issues, while there is plenty of upside to be gained with improved stock keeping- and price-management. Customers typically like to receive more information on food products with an eye on health and environmental foot print.
Likewise, opportunities are prominent in most of the apparel sector. Many fashion products are – much alike food – ‘fresh’ products that may erode quickly in value towards the end of the season. ‘Dynamic pricing’ allows retailers to play into that, improve margins and make customers feel that promotions fit the passing of the season. Over-stocking can be circumvented by steering on stock levels throughout the value chain (producer, wholesaler and retailer). Moreover, customers like to be informed about for example the sustainability of their trousers or jackets.
Conclusion: a brand new life for the barcode
Technological innovation not necessarily means inventing new stuff. Redeveloping existing technologies provide plenty of opportunities as well, as clearly is demonstrated by the new barcode.
Started off as a pretty static product- and price-code, the technologically revived barcode is set for a new and dynamic life, benefitting both retailers and their customers.
To further illustrate the content of this article, we have created a "live example" that shows the benefits of the new technology.
The example below shows the journey of a vegetable basket in 5 steps from grower to retailer - all based on 1 unique constant barcode per unique product!
In this live example we unfortunately need to use different barcodes in order to tell the story. The best before date barcode below proves the operation of the system: every new hour the price of that constant barcode is adjusted without manual interference. Test it!