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The barcode turns 40. What comes next?

June 27, 2014

Happy birthday to you.
Happy birthday to you.
Happy birthday dear barcode, happy birthday to you.

Forty years ago yesterday, a cashier at a Marsh Supermarket in Ohio scanned a pack of gum and the Uniform Product Code (UPC) took its first step to becoming the standard for tracking merchandise at retail.

"Today, that bar code on the back [of a product] is one of the most trusted marks in the world," Art Smith, CEO of GS1 Canada, told The Globe and Mail.

Those of us of a certain age can still remember the days before barcodes. Back then, working at the checkout meant every item needed to have its price keyed in manually. The process was slow and mistakes, particularly after several hours on shift, were common.

The advent of barcodes made being a cashier so much easier, except in those instances when an item's code was not entered into a store's system or the system went down altogether.

As a Wired article points out, the barcode had a revolutionary effect that went well beyond grocery stores. A barcode means that a product is not just a product but points of data "where everything can be cross-referenced with everything else, and everything has a number."

While the barcode has proven its reliability over the years, there are plenty looking to put it out of business. Over the past decade, many have suggested radio frequency identification (RFID) technology was the logical successor to the humble UPC. RFID, evangelists have said, will improve the efficiency of the supply chain from the source of raw materials to the shelf. It can be used to manage price changes, improve compliance levels, track display performance, reduce shrink and offer other benefits.

An article on RFID 24-7 published earlier this year, in fact, made the case that 2014 would finally bring the long predicted RFID revolution.

"We've been talking about omni-channel for a while, but I think we'll see some true omni-channel deployments this year," Bill Hardgrave, dean and Wells Fargo professor, College of Business, Auburn University, told RFID 24-7 in January. "I think we'll see a couple of retailers that will really catch everyone's imagination as far as what you can do when you really do know what products you have and where you have them. Then you are able to provide that customer with a true omni-channel experience. We'll see some examples of that this year and that will set the tone for everyone else."

Discussion Questions:

What is your take on the contribution of the barcode to the retail industry? Has any other technology had as great an effect on retail over the past 40 years? Is a successor technology ready to replace the UPC?

While we value unfettered opinion, we urge you to show respect and courtesy for people or companies about whom you comment. Keep in mind that this is a public, professional business discussion. RetailWire reserves the right to edit or refuse the publication of remarks that we deem unsuitable. We may also correct for unintended spelling and grammatical errors.

Instant Poll:

How long will it be before barcodes are replaced at retail?

Comments:

Barcodes have allowed stores to become more efficient. It's simple and just works. I know 20 years ago there were concerns about running out of UPC numbers, but I haven't heard those complaints in a while.

I think RFID has a huge place in the specialty apparel and (certain) hard goods industries. It brings many additional benefits that will be realized as the cost of readers (and full coverage) continues to fall.

I don't ever see it working in the grocery world because of the liquids and metals issue. If you need line-of-sight anyway, barcodes are just easier to see and use.

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Paula Rosenblum, Managing Partner, RSR Research

Absolutely one of the top five contributions to the retail industry in the last 50 years. I can't think of another technology with as profound an impact.

The RFID revolution has been predicted with little accuracy for the last 10 years, so I think the barcode is here to stay for at least the next 10-plus years.

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Bill Davis, Director, MB&G Consulting

RFID is the successor to the barcode. Much like the barcode, RFID will take time for the entire industry to implement. The barcode started in grocery and the last segment to use barcodes was the apparel segment. RFID is already a major technology for the apparel industry and it will be grocery that will be last. RFID will soon be able to work with all of the metals and liquids in a grocery store, within the next five years or maybe less.

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Frank Riso, Principal, Frank Riso Associates, LLC

At the risk of gilding the lilly let me also say that barcodes have clearly moved the retail industry out of the 17th century and provided a platform for the 21st.

As far as other technologies go, I'd say the Internet has had as profound an impact, and one that will continue long after barcodes have been relegated to museums.

As to the final question, the answer may be "yes," but if it is, my guess is that it exists in beta form in a tech lab somewhere.

Will it be RFID? Probably not as we currently know it. Will it be something else altogether—an embedded sensor that's built into the molecular structure of objects? Maybe. Who knows?

One thing is for sure; the continued emergence of platforms and channels requires solutions that are transparent and channel/platform agnostic. Maybe today that is a barcode, but my guess is that it won't be the answer over time.

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Ryan Mathews, Founder, ceo, Black Monk Consulting

As an IBMer, I am proud to be a part of the organization that created what is used today as the UPC. That's right, a contest of sorts was held and several designs were submitted, however the IBM submission was chosen to be the standard, now the world over. Cool, huh?

What I can tell you is, that after many trials and pull-backs, RFID still has a home at retail stores. That's right, in ANY format of retail, even grocery. Sure, there are reader challenges with certain packaging, however many of those have been overcome. The biggest obstacle remains the pricing, and because of that, when you think of the number of vendors in a typical format supermarket, you can quickly see the issue facing all those mom and pop CPG companies to become RFID-enabled.

I think we will continue to see proof of concepts around the world in varying retailers; to begin with, pallet-level, then case-level RFID. Item-level RFID is a long way off before it is truly ubiquitous, though. That said, I hesitate to say "never" when it comes to RFID.

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Ralph Jacobson, Global Consumer Products Industry Marketing Executive, IBM

The barcode has had dramatic and obvious impact on the processing of purchase transactions at the point of sale. When thinking about the prospects of successor technology replacing it, I liken the barcode to the magnetic stripe on a credit card. Until a technology comes along that is not just "interesting" or creates change for the sake of change, the barcode will remain fixed as the centerpiece of retail inventory management.

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Bill Hanifin, Managing Director, Hanifin Loyalty LLC

I was a member of the original task force set up to define a UPC code and symbol in the early '70s.

Needless to say the success of this endeavor surpassed all of our expectations although the roll-out was much slower than anticipated as everyone waited for symbols to appear on products before purchasing scanners and the manufacturers were waiting on stores to buy scanners before they changed packaging.

'upc'

Exactly 40 years ago I was pounding prices into an NCR mechanical register at a Food Fair on Long Island—my first real job. The database was in my head—I'd guess I knew at least several hundred prices due to repetition. I'd go home after shift with blue ink on my hands that was used to stamp prices on bottles, cans and boxes.

A few months later I encountered machine-readable bar codes for the first time, in the Cornell Campus Store, where a proprietary system that used pen scanners was under test. It was obvious then, as it is now, that the scanners were superior to the blue ink or the mental database.

It's the item number, not the code we choose to represent it, that made UPC scanning so incredibly significant in the decades that have followed. A shift to RFID or image recognition may refine and extend the revolution, but the impact can never be as profound. Bar codes will coexist with newer technologies for decades to come.

It is notable that today we are still working to deliver fully on the promises of scanning—financial controls; perfect sales data; shopping basket analysis; etc. But the changes set in motion by that pack of gum at Marsh are as undeniable as they have been pervasive.

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James Tenser, Principal, VSN Strategies

The barcode has revolutionized how we manage our products, our POS and to a large degree our inventory. However, we are still not managing all of the potential, effectiveness nor the tremendous amounts of data that we are recording or collecting with the barcode. Why spend more money on RFID or other technologies to create more data points that we don't use? We are still years away from using, let alone maximizing our potential data with barcodes...RFID is another technology solution looking for a problem....

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Kai Clarke, CEO, American Retail Consultants

The timing for this anniversary is perfect. I was speaking this week at the American Society for Automation in Pharmacy mid-year conference attended by many of the nation's leading POS system providers.

The next BIG thing relative to barcodes for the healthcare industry revolves around unit-level track-and-trace on all future pharmaceuticals. Signed into law in November 2013, this law has far-reaching implications for the supply chain and the pedigree of all drugs.

We ain't seen nothing yet!

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Dave Wendland, Vice President, Hamacher Resource Group

Well this has definitely proved to be the single most important contribution of technology and perhaps defines nature of technology which it succeeds - simple, easy to use, integrated and cost effective. Another technology which has worked (and not just for retail) is the internet—both in terms of advertising and marketing as well as creating new channels. How does the barcode fit into the new space of internet retailing co-existing with traditional retailing and how can that be bettered by using other technologies is something to be seen. I would bet on wireless and bluetooth technologies, RFIDs, etc. to create the next big impact.

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AmolRatna Srivastav, Asst. General Manager, Analytics and Insights, Tata Consultancy Services

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