Brands & Retailers Alike are Eager to Move Past the UPC

Both retailers and brands are keen to make the switch from the UPC to a data-rich code, a new study from GS1 US revealed, but their state of readiness varies.

The study, "Powering the Future of Retail," reported that 82% of retailers and 92% of brand owners support transitioning from the UPC to a data-rich 2D barcode, such as a QR code, digital watermark, RFID and/or GS1’s own DataMatrix code in the next one to five years.

GS1 is a non-profit that facilitates industry collaboration to help improve supply chain visibility and efficiency through the use of its supply chain standards system, GS1 Standards. Its study was conducted in partnership with VDC Research, which surveyed nearly 600 IT decision makers at retailers and conducted interviews with retailers, brand owners, solution providers, industry associations and academic institutions during 2018 and 2019.

While the study estimated that 68.5% of retailers use laser scanners incapable of reading a 2D barcode, 84% are evaluating or plan to migrate to advanced optical point-of-sale (POS) scanning technology. What’s more, 60% of retailers with over $1 billion in revenue are prioritizing updating their entire POS infrastructure within the next two years because of omnichannel commerce and mobile POS requirements.

Motivation for switching to more advanced barcodes and POS systems included improved inventory accuracy, product authenticity, traceability and recall management, freshness and waste prevention, and returns management.

Meanwhile, the barriers cited included cost, disruption to products and packaging, a lack of capital investment and IT staff required for technical infrastructure changes. During the transition, brands and retailers will need a flexible architecture that supports dual barcoding; GS1 cited the credit card industry’s use of human-readable numbers, magnetic swipe, NFC “tap to pay,” and chip EMV technologies as an analogy.

"The UPC 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," said John Phillips, senior vice president, customer supply chain and go-to-market, PepsiCo. "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."