COUPON BAR-CODE CHANGES SEEN BY '08 2004-08-16 (1)

Julie Gallagher

LAWRENCEVILLE, N.J. -- A proposed redesign of the bar code used on coupons would require retailers to be able to scan and process a 14-digit bar code by 2008, according to the Uniform Code Council here.

The concerns about coupon bar codes have been triggered in part by the UCC's decision to issue new "variable length" company prefixes used in standard product bar codes to identify manufacturers, in lieu of a fixed-length code.

The other factor is the so-called 2005 Sunrise Date, Jan. 1, 2005, when UCC expects North American retailers to be able to scan longer, 13-digit bar codes coming from countries that use the EAN bar-code system.

These bar-code changes could lead to "a growing number of conflicts" in coupon processing as company prefixes on coupons begin to overlap, noted Tom Brady, UCC's vice president of automatic identification and data capture. "This will make accurate redemption more and more a manual process, increasing the cost of redemption and most likely increasing the opportunity for fraud," he said.

The solution proposed by the industry group, called the Coupon Re-Engineering Workgroup, is to phase in the use of 14-digit Reduced Space Symbology (RSS) bar codes. This would require retailers' point-of-sale systems to become RSS-compliant -- capable of scanning and processing the codes -- by January 2008, said Brady.

The work group is sponsored by the Joint Industry Coupon Committee (JICC), which is co-chaired by Don King, associate director, Procter & Gamble, Cincinnati. JICC is comprised of the UCC, Grocery Manufacturers of America, Food Marketing Institute and the Association of Coupon Professionals (ACP).

The work group's current draft solution, Revision 5.3, was released in January, but will be revisited at a JICC meeting in Washington on Sept. 1. JICC continues to seek feedback on the proposal. Copies of the proposal can be obtained through ACP by contacting its executive director, Joanne Weber, at [email protected].

"We need to build additional industry awareness about the issue of coupons because it is going to be a problem," Brady said. "The issue touches a lot of organizations on many levels so we are looking for as much involvement as possible." ACP recently requested feedback from its members on the coupon redesign.

Coupon re-engineering will also be a topic of discussion at JICC's annual conference on Oct. 13 to 15 at the Renaissance Scottsdale in Scottsdale, Ariz.

Meanwhile, retailers who are upgrading their scanning systems -- which many have done in preparation for the 2005 Sunrise deadline -- may want to take into account the need to scan RSS codes in 2008. "Scanners and software will have to be replaced or upgraded so that retailer POS systems are able to read RSS," said Larry Fox, vice president of Pinpoint Data, a Watchung, N.J.-based coupon facilitator.

However, the work group chose the January 2008 date for RSS compliance in part because most scanners will be RSS-compatible by then for other reasons. Indeed, UCC has encouraged retailers to be 14-digit-compliant by the Jan. 1, 2005, deadline, rather than just 13-digit-compliant. "Although the upgrade of hardware involves a major cost factor, vendors have been supplying RSS-capable scanners for over four years now," said Brady. "By 2008, the majority of installed scanners will not need to be upgraded."

RSS codes are also being tested on small-size products and on perishables like produce. "[Thus,] these upgrades may not take place specifically for coupons," said Fox. "RSS is coming into retail through some other channels and retailers may need to become RSS-compliant to scan produce and drugs."

The work group's draft solution proposal calls for a phased migration to the RSS plan beginning with the creation of an interim coupon standard in which the current EAN/UPC bar codes and the RSS "Expanded" bar codes are both printed on coupons.

After manufacturers start printing coupons with the new RSS Expanded codes and the EAN/UPC codes, a period of transition would follow with retailers making sure their systems can read the RSS codes, removing the need for the original EAN/UPC base code. Re-engineered coupons will allow for improved scanning accuracy at the POS, reduced fraud and misredemption, full-offer tracking and more efficient retailer- specific promotions, according to Fox.

"Retailers' ability to use the RSS coding structure will save them from having to perform manual processes on the front end and expedite checkout times," said Ron Fischer, president of ACP.

"Promotions will have the ability to become more creative and complex," added Steve Arens, senior director, market development at UCC. "The existing coupon system just doesn't support multiple purchase programs."