In 2024, retailers navigated relentless inflation, ever-changing consumer trend cycles, and persistent supply chain challenges.
These hurdles may evolve but they won’t disappear in 2025.
Retailers must continue to effectively manage inventory amid rapidly changing consumer preferences as well as uncertain geopolitical conditions that can exacerbate pricing pressures and impact retailers’ profitability and operational efficiency.
Additionally, they must win over shoppers still grappling with rising costs of living. It’s a tall order, but sometimes the most transformative tools are closer than we think, writes Stephen Gryczka, Director Strategy and Corporate Development at Markem Imaje.
The 2D barcode (or QR code) on packaging can unlock new, streamlined pathways for efficient inventory management and consumer engagement, empowering retailers to meet the demands of a complex market and succeed in a changing world.
Understanding 2D Barcodes and the GS1 Sunrise 2027
Two-dimensional (2D) barcodes are graphical images that store large amounts of data for access by consumers and workers. While today’s standard UPC (1D) barcodes can only convey a limited amount of data on packaging, like item identification and pricing, 2D barcodes stand to carry a much wider range of information. Though the technology has existed for almost more than 30 years, 2D barcodes rose in popularity during the COVID-19 pandemic as the default access point for restaurant menus and routine forms to facilitate a no-touch or low-touch consumer experience.
As the world becomes more technologically centred, consumers demand access to more product information, and retailers and brands must evolve. For decades, the standard barcode has served retailers’ needs to track products but cannot meet the increasingly complex consumer demands and business needs. 2D barcodes enable a single point for retailers to access product information such as inventory levels, sell-by dates, country of origin and recall notices. This breadth and depth of 2D barcodes offers critical opportunities for retailers to streamline inventory management, reducing manual labour costs to reduce human errors, explore dynamic pricing, and increase engagement with shoppers for conversion.
However, adoption will take time and guidance. GS1 is the global organization for data exchange standards and the organsation behind GS1 Digital Link, the standardised model for encoding information within a 2D barcode, which can be scanned at checkout and connected to online information. Recently, GS1 activated the Sunrise 2027 to encourage the widespread adoption of specific GS1 standards for Digital Link to better share data. The initiative encourages widespread use of Digital Link on product packaging by 2027, with retailers able to scan both the 2D and barcodes at Point of Sale (POS).
This seismic shift in retail operations may sound daunting, but it presents an exciting opportunity for retailers to collaborate across their supply chain and utilise data to its full potential. Throughout this GS1 Digital Link transition, retailers should keep three priorities top of mind for success – streamlining inventory management, supporting retail brands, and engaging consumers.
Digitising Inventory Management
Inventory management is an arduous process – from demand forecasting to tracking and manually managing inventory, retailers are well versed in the importance of and challenges that come along with inventory management. Given the intricacies of this process, some of the most pressing challenges retailers endure include inaccurate data, operational inefficiencies, and limited visibility, especially as it relates to managing inventory of products with expiration dates. Retailers are left wanting more, and there are solutions available to improve data management and reimagine inventory management processes.
One of the cornerstone benefits of GS1 Digital Link is the ability to store more product data within a 2D code, including not just pricing information but also stock-keeping unit (SKU), sell-by dates, point-of-origin, and other important product information for consumers to access. By accommodating and streamlining more data in a barcode that can be easily and accurately scanned, retailers can increase efficiency by eliminating the need for manual inventory, enabling swift communication between retailers and brands, and increasing understanding of consumer trends and purchasing habits.
For example, retailers can deploy 2D barcodes to more efficiently manage inventory, discounting and moving products based on sell-by dates to reduce fully costed waste from in-store expirations. In addition to tracking point-of-origin, 2D barcodes can also facilitate real-time recall alerts to speed recovery of any compromised product, preventing those items from leaving the store—and even extending notifications to consumers to ensure their safety if the product has already been purchased.
This approach requires retailers and brands to be in lockstep to determine what data must be accommodated within the code. From sell-by dates to product origin and web pages, retailers need to determine what data will be of most importance to improve operations and customer experience. Additionally, the cleanliness of the data will be of utmost importance – keeping data up to date will ensure it is effective and adds value to brands, consumers, and retail operations. Retailers who push for the implementation of 2D barcodes to unlock greater opportunities for managing, interpreting, and actioning this data must also implement the correct POS technology and data infrastructure to scan, process, send, receive, and properly utilise the data that is available to them.
Lastly, consistent communication and use of consistent data between the retailers and brand owners will be crucial for utilising 2D barcodes to their full potential. For example, by real-time monitoring of inventory levels, retailers can report back to brands on the trends they are witnessing that can impact when orders are needed, how SKUs within a brand are performing, if products have been recalled, and what opportunities may be available for the brands. With the right system, the best set of data, and clear communication, retailers will thrive through implementation of the 2D barcode.
Take Action: Initiate internal discussions to define your 2D barcode requirements, including product data that can be used from operations, supply and consumer experiences for conversion and loyalty, and waste reduction and inventory management strategies. Discuss how to set up your data management system to handle an increased amount of rich data that can inform swift changes to inventory, dynamic pricing, product shelf rotation, and waste management.
Prioritising Private Label Products
Retailers have untapped potential to optimise management and improve sales of their own brand products with 2D barcodes. When it comes to retail brands, the retailers are in the driver’s seat from end-to-end of the supply chain, unlocking even greater supply chain transparency and control to gain efficiencies in inventory management. For example, by creating a more robust hub for retail brand product details alongside store-wide inventory management, retailers can more swiftly identify and plug any holes left on shelves by name brands.
Additionally, retailers can ramp up sales of their own brands by leveraging the promotional opportunities facilitated by 2D barcodes. Often perceived as lower value compared to name brands, retail brand products can face uphill battles to win over consumers. However, through the use of 2D barcodes, retailers can create an avenue to educate consumers on the craftsmanship, quality, and ethical standards behind their own product offerings.
Retailers can also differentiate their brand offerings through unique digital experiences. With the scan of a 2D code, consumers could be directed to a tailored product webpage that centralises critical product information for their convenience. This might include comprehensive ingredient lists, nutritional information, and insight into the product journey. This platform can also include value-added features, like recipe ideas (dynamically changing depending at what hour of the day you scan the code) for various foods, tips and hacks for personal care or cosmetic products, or recycling or disposal instruction. Prioritising marketing efforts on these landing pages will create opportunities for consumer engagement that strengthen brand perception and loyalty and drive future purchases with coupons and other promotions.
Take Action: Do not miss out on the untapped potential for your private label brand. Consider the resources that can be put behind creating greater efficiencies in inventory management as well as dynamic promotions that can drive consumer engagement and sales.
Creating a Feedback Loop with Shoppers
2D barcodes offer a wide landscape for digital information that can potentially reshape the inventory, promotions, and overall operations of retailers, creating “digital twins” of every tangible product on a shelf. By creating virtual models of objects and operations, companies can enable navigation to various product-related content and experiences.
Integrating 2D barcodes with loyalty programs is a clear-cut opportunity for efficiency and increased customer satisfaction. If a customer scans a product prior to checkout and finds a coupon, it has the chance to positively sway a purchase. Post-purchase, automatic delivery of points based on dollars spent can incentivise customers to purchase repeatedly. Additionally, retailers can open a two-way communication channel with customers by incentivizing feedback, allowing customers to share thoughts, comments, and questions about products, levelling up from the standard in-store one-way communication.
In today’s era of dizzying social media and consumer trends, digitally connecting with consumers at the product level can also enhance a retailer’s response to trends. By utilizing digital listening tools and social media monitoring, retailers can adjust their products’ landing page content to play into the trends, showing consumers their relevancy. Digital monitoring can also support inventory planning and management. If a product goes viral, retailers can work with the brand to prepare for the proper stock to support a potential boom in sales.
Take Action: Leverage the interconnectivity of 2D barcodes to close and streamline the feedback loop with shoppers. Consider the different possibilities for integrating rewards programs, facilitating consumer surveys and reviews, or applying the insights of market intelligence and social listening to inform inventory based on fast-moving or emerging social media trends.
Hit the Ground Running
GS1 Sunrise 2027 is a dynamic topic that will continue to develop over the next three years, but retailers must act now to ensure a thorough and effective transition. 2027 may seem far off, but the holistic effort needed to make this transition a success will take significant time and dedication. With collaboration across the supply chain, high quality data, and interconnectivity, retailers will be well positioned to succeed in the GS1 Digital Link transition.
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