THE 50-YEAR-OLD TECHNOLOGY THAT BRANDS AND RETAILERS ARE TRYING TO QUIT

Standardized barcodes that stores use to scan items at checkout made their debut in 1974. Now, the industry wants to replace them with QR codes.

Scanning barcodes at checkout could be a thing of the past as early as 2027, brands and retailers say, as they work to replace the decades-old technology with newer, more capable QR codes, a move that could boost sales and customer engagement.

Companies such as Coca-Cola, L’Oréal and Procter & Gamble are working toward this goal, as are many retailers who carry their products.

The transition won’t be easy, requiring cross-industry global collaboration, software and hardware updates for retailers, manufacturing changes for brands, and educating shoppers who use self checkout.

It also won’t be cheap.

Companies declined to disclose specific figures, although P&G said it would aim to keep transition costs low by making changes at the same time as planned artwork revisions or as new products are launched.

But companies say the upshot could be big.

There are a lot of advantages to using QR codes, which provide a bridge to the digital experience, said Stephane Lannuzel, beauty tech program director at​ L’Oréal.

“The barcode just celebrated its 50th birthday,” he added. “I think we should all try to make the switch.”

While the idea behind barcodes dates to the late 1940s, standardized barcodes—also known as universal product codes, or UPCs—made their debut in 1974 when Brussels-based not-for-profit organization GS1 created a set of standards to assign every product a 12-digit code (13 digits if outside the U.S.).

Barcodes revolutionized the way retailers could track and sell inventory since they could identify a product’s information with a quick laser scan, said Bob Carpenter, president and chief executive officer of GS1’s U.S. member organization.

Before that, each product was marked with a price that had to be manually typed into a register.

QR codes, invented in 1994 but finding more widespread use with the smartphone, can store significantly more product information than barcodes.

For retailers, a QR code can host not just price, but richer information about coupons, recalls, and more. Shoppers with smartphones can scan codes to access detailed product information regarding nutrition, usage and environmental sustainability as well as offers that wouldn’t fit on a label.

Today, many brands are experimenting with putting QR codes on their labels to boost customer engagement, alongside traditional barcodes that are used at checkout.

L’Oréal has experimented with putting QR codes on packages of hair dye that lead users to a website where they can do a virtual try-on of that color and watch tutorials.

Lannuzel said consumers who engage with these experiences are more likely to purchase by a factor of two to three.

The ultimate goal:  a single QR code that can satisfy customer engagement as well as point-of-sale and inventory scan requirements.

For a QR code to be used at point-of-sale, it needs to be embedded with a digital standard set by GS1.

It also needs to be sold by a retailer that has readied its hardware and software for the new mode of scanning.

GS1 is working with brands and retailers on a project known as Sunrise 2027, with the goal of a full transition from traditional UPC barcodes to point-of-sale enabled QR codes within the next three years.

But many things need to happen before companies realize the full benefits of the transition.

Dave DeLaus, chief information officer of East Coast supermarket chain Wegmans Food Markets, said he is working with the company’s hardware providers to adapt QR code scanners that are used not just at point-of-sale systems but throughout the stores, including at the backdoor as products are received and in the aisles for price lookups or inventory.

Backend software systems also need to be updated to process the new scan format, he said. All the applications that use scanning, such as the e-commerce platform, need to be adapted.

“That’s something that we’re on the road to do right now,” he said.

Coca-Cola said it has run some real-world tests with retail partners on items with both a barcode and a QR code enabled for point-of-sale systems.

Last year, it tested some limited-edition Fanta flavors around Halloween, said Brad Spickert, Coca-Cola’s senior vice president of supply chain for North America.

The tests proved that the technology works, Spickert said. What still needs to be figured out, he added, is how to educate consumers who are used to scanning barcodes at the self-checkout.

The fact that consumers don’t always love interacting with QR codes could also create some complexity.

Ensuring this effort remains a priority across the industry is another obstacle, said Alfredo Colas, senior vice president of data and analytics and digital go-to-market at P&G.

Brands and retailers continue to battle a challenging economic climate, as consumer spending remains guarded.

But if accomplished, Colas said the benefits of making the transition would be far-reaching.

“The best use cases are probably the ones we’re not yet thinking of,” Colas said, “the very same way that the people that started the original barcode 50 years ago couldn’t really imagine how transformational and how pervasive the barcode has become in our industry, in our way of life.”

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