Deciphering the New Coupon Codes

MICHAEL GARRY

Next year, retailers will begin to see changes in the bar codes printed on manufacturers' coupons. A new bar code — the GS1 DataBar — will contain up to 70 characters of data, allowing manufacturers to include expiration dates as well as a wider range of discounts and offers. Initially, the GS1 DataBar (previously called the RSS code) will coexist on coupons with the current UPC code, but by 2010 the new code will stand alone. Retailers need to get started this year preparing their scanning equipment, POS software and other systems for the impending change. At the Food Marketing Institute Show plus Marketechnics last month, Alan Williams, vice president of application development for Ahold Information Services, Landover, Md., and Don King, associate director, advertising services, Procter & Gamble, Cincinnati — who are the co-chairs of the Joint Industry Coupon Committee — gave a joint presentation on the GS1 DataBar. SN asked Williams to break down what retailers need to know about it.

SN: What is the Joint Industry Coupon Committee?

AW: The JICC is a group sponsored by the Food Marketing Institute, Grocery Manufacturers Association, Association of Coupon Professionals and GS1 US. It was formed to deal with the growing issues around the limitations of manufacturer-based coupons.

SN: Why do coupon bar codes need to change?

AW: In 2005, GS1 US [formerly the Uniform Code Council] started issuing manufacturer company prefixes [for bar codes] that run anywhere from six to 12 digits. But the current manufacturer coupon bar code only allocates five digits for the same field. Another reason is that, in today's world, manufacturers are constrained to less than 100 value codes [used to represent discounts on coupons]; there are coupon values CPG companies might like to convey to consumers that are not represented in today's value codes. The new bar code will use the actual value — like $1.19 off — instead of value codes. The other reason is that manufacturers would like the ability to make more complex offers: Buy this and this and get this; or buy any of these three products and save that. There is no way to validate these offer requirements using today's coupon structure.

SN: What about expiration dates?

AW: Today, if the expiration date is printed on the coupon, it is not always checked by the cashier. Ideally, you want the cashier to just scan the coupon, not look at it or interpret it. The new GS1 DataBar will allow complete offer validation — did the consumer meet the purchase and time-frame requirement? That can't be handled with today's limited structure.

SN: Why will the GS1 DataBar help eliminate “992s”?

AW: The 992 code — sometimes called the Wild Card — is sometimes used today when a coupon contains an offer that can't be validated. If a coupon says “Buy two boxes of cereal and get $1 off a gallon of milk,” there's no way to validate that the milk was purchased, and a 992 could be used. But it's like printing money. Some retailers — especially those that double-coupon — don't like 992s, because it increases their exposure, and they apply pressure on manufacturers not to use them. In the new world, manufacturers will be able to list up to three company prefixes and still validate the offers, so the 992 wouldn't be needed.

SN: Will most scanners be able to scan the GS1 DataBar?

AW: In 1998, scanner manufacturers started delivering scanners with that capability. But scanners built between 1998 and 2002 would still need a chip-set or firmware upgrade. Since 2002, all scanners come with the ability to scan the DataBar. Retailers should contact their scanner and POS software vendors [to confirm their capabilities].

SN: How will the GS1 DataBar cause retailers' transaction logs to change?

AW: The retailers' T-log is their crown jewel — it contains everything that takes place at the POS. So retailers will need to change the filters to not only see a number 5 [that currently identifies a coupon] but to see an 8110 [the new coupon ID]. The 5's will still be out there; if a coupon has no expiration date, it's good forever. In addition, the T-logs will have to accommodate every other attribute represented in the DataBar — up to 70 characters.

SN: Will capturing the GS1 DataBar information enable the industry to clear coupons electronically and thereby dispense with the paper?

AW: The GS1 DataBar won't do that entirely, but it's another step in the journey. What's key to the clearinghouses and manufacturers is tracking the offer code, which is used by manufacturers to track redemptions of specific offers. So if you want to do an analysis by geography, you issue an offer code accordingly. Today, the offer code is contained in the add-on [GS1-128] code, but I've not found any retailers today that are scanning and picking up the add-on code, which will be taken off coupons in 2008. In the DataBar, the offer code information will be included, and it will be captured in the T-log. But there are other steps to be taken before we get to electronic clearing. For example, retailers will need a means to destroy the paper coupons yet still have an audit capability.

SN: The GS1 DataBar is also being tested on perishables such as produce and meat. Will retailers need to do additional preparation for those applications?

AW: From a scanner perspective, no. Once you activate a scanner to read the DataBar, it will read all DataBars. But there will be additional work on the POS software side. For meat, there will be other fields on the DataBar like weight, sell-by date and use-by date, so the POS software will need to handle and process those additional application identifiers. There are also database implications. Today, produce like bananas use PLUs, but in the new world, each banana vendor will be identified by bar codes on stickers. So the pricing database will need to support multiple GTINs [global trade item numbers] for those products, just as they do for grocery products.

SN: How far along is Ahold USA in preparing for the GS1 DataBar?

AW: For us, this will be a 2008 project, starting in January. This June, we start working on the capital requirements for 2008 and beyond. We're going to approach both initiatives — coupons and perishables. We did a survey in 2002 showing that most of our old scanners were replaced, but we'll need to do another inventory of scanners. We'll also work with our multiple POS software vendors and assess internal systems. Then, in 2009, we'll take code delivery from our POS vendors, do internal testing and make internal changes. We may focus more on the coupon work in '08 and do the fresh work in '09.

SN: What might the impact be on retailers who are not ready to scan and process the GS1 DataBar by January 2010?

AW: They would have to handle those coupons manually, so they would take a labor hit if they're not ready. The timelines and dates have been agreed to, but they will only work if everyone works toward achieving this.