Raising the Bar 2008

MICHAEL GARRY

Beginning with a 10-pack package of Wrigley's chewing gum that now resides at the Smithsonian, supermarkets have been scanning bar-coded packaged goods for more than 34 years.

During this time, bar-code scanning based on the 12-digit Universal Product Code (UPC) has brought about revolutionary efficiencies for North American retailers and given them massive amounts of data with which to analyze their stores. But it has largely overlooked key perishables departments, such as loose produce and fresh meat and poultry, upon which retailers increasingly depend to differentiate themselves from competitors.

However, the industry is now making some strides toward the adoption of a new bar code — the GS1 DataBar (originally called the RSS code) — that would put perishable products on an equal footing with their Center Store counterparts. The DataBar, developed and overseen in the U.S. by GS1 US, the same standards group that manages the UPC, is small enough to go on individual apples and plums and robust enough to incorporate all of the information that fresh meat products require.

In the loose produce arena, several suppliers are putting stickers on fruits such as apples and bananas, and on vegetables such as peppers and avocados, that bear both the traditional price look-up (PLU) code and the DataBar — a version known as the “stacked omnidirectional” symbol. In contrast to the PLU, which looks up a price for a generic “banana,” the DataBar contains a 14-digit GTIN (global trade identification number) that identifies the product and its supplier and distinguishes between conventional and organic.

Wal-Mart Stores, Bentonville, Ark., and Loblaw Cos., Brampton, Ontario, have acknowledged that they are scanning DataBars on loose produce in some stores. Last year, Loblaw reported that it was testing this process in 15 stores and planned to do so at many more of its more than 1,000 corporate and franchised stores in Canada.

Kroger, Cincinnati, is preparing to engage in a pilot of DataBar scanning of produce, according to Steve Arens, senior director, GS1 US, Lawrenceville, N.J. (Kroger declined to comment.) In addition, he said, Meijer, Grand Rapids, Mich., has tested the DataBar on produce and is “preparing to move forward with its use.”

The DataBar is also capable of encompassing the myriad data points needed to fully validate manufacturer coupons, including expiration dates and complex offers.

This year, manufacturers have already begun issuing interim “hybrid” coupons that include both the traditional UPC-A bar code and the DataBar (and eliminate the UCC/EAN-128 code), making coupons the first area to move to the DataBar in a widespread fashion. As of June, 30% of CPG companies had issued the interim coupons, said Arens.

However, to date, just coupon clearinghouses, and not retailers, have begun scanning and processing the information contained in the DataBar, Arens noted.

2010 SUNRISE

The industry has agreed on a series of milestones for adoption of the DataBar on coupons and products. In 2006, GS1, the parent of GS1 US and other GS1 country organizations, set January 2010 as a global “sunrise date” for general use of the GS1 DataBar. That is the target date for scanners to scan the DataBar and for the POS to process information contained within it.

In 2007, GS1 US set 2010 as the year when the DataBar alone will be used on coupons (no later than June). In a recent preliminary survey of 40 retailers — the final survey will be released later this year — 87% of respondents said they would be ready for the DataBar on coupons by January 2010. One in four said their front-end systems were currently ready.

“We expect major chains to be ready” for the DataBar on coupons by 2010, said Arens. “It could be an issue for independents and drug stores with older equipment that can't be updated.” The latter retailers would have to invest in new scanning equipment. Retailers that aren't able to scan the DataBar on coupons would have to enter the discount amount manually at the POS.

Alan Williams, vice president of application development, Ahold Information Services, Landover, Md., said it's possible that if many retailers are not ready to scan the coupon DataBar in mid-2009, then manufacturers will not remove the UPC-A code in 2010 and go to a DataBar-only coupon. “An assessment will need to be done.”

Within Ahold US, the operating companies — Stop & Shop, Giant of Landover, Md., and Giant of Carlisle, Pa. — plan to be ready for the coupon DataBar in 2010, said Williams. Coupon DataBar readiness, he noted, will be part of Stop & Shop's conversion to a new POS system from Fujitsu Transaction Systems. He could not comment on the Ahold chains' plans for the DataBar on fresh products except that it is in “evaluation mode.”

To support retailers and manufacturers with the coupon DataBar, GS1 US has published a guide, “North American Coupon Application Guideline Using GS1 DataBar.” Another guide, “GS1 DataBar POS Implementation Guide for Coupons,” will be available later this year.

In May, GS1 approved the “Fresh Foods Identification” proposal, which established 2010 as the year when companies would begin migrating from “restricted circulation numbers” to DataBars that contain a GTIN and application identifiers (AIs) representing other data. While some of the AIs will be optional, all must be at least “tolerated” by POS systems, said Williams.

The proposal set 2014 as the year when the DataBar, with all AIs, will be considered a global open standard. “The goal is that retailers around the world in 2014 will accept DataBars on any product,” Arens said.

North American retailers should be making sure their POS scanners and software are able to read and process the DataBar on coupons, and while they are at it, they should enable their systems to scan and process the DataBar on produce at a minimum, said Williams. “It's a small add-on,” requiring updating of the pricing database to support multiple GTINs for produce items, he said. For fresh meat, the POS software will need to be able to process the AIs on the DataBar.

Major retailer implementation of DataBar scanning for fresh foods, added Williams, “is expected to begin in 2010, increase significantly in 2011 and continue through 2014.” In the preliminary GS1 US survey, 100% of respondents said they were preparing to scan the DataBar on produce, 62% said they were preparing to do so for meat, poultry and seafood and 50% were preparing for deli.

This is not the first time retailers have been asked to update their scanning and POS systems to accommodate a different kind of bar code. As recently as January 2005, they were expected to be capable of scanning, processing and storing 13-digit and eight-digit European Article Number (EAN) bar codes on products imported from outside the U.S. and Canada. Most retailers are able to scan these products today.

The Right Price

For produce suppliers such as Dole Fresh Fruit Co., West-lake Village, Calif., the lack of a bar code on loose produce means that organic bananas, which sell for 20 cents per pound more than conventional bananas, are often “processed as conventional bananas” by cashiers who “just want to get customers through the checkout,” said David Bright, director of marketing, Dole Fresh Fruit, speaking last month at the U Connect Conference in Dallas.

By having cashiers scan the DataBar on a banana instead of entering a PLU, retailers can “recover much of the price differential between random-weight conventionally grown and organic fresh produce items that is presently lost at the front end,” said Bright. Loblaw is one of the retailers to which Dole has been shipping bananas with DataBar stickers.
In the current economic downturn, the need to avoid margin errors is “acute,” said Charles Lloyd, chief operating officer, GS1 US. “That will be an added impetus to accelerate the adoption of [the DataBar].”

By offering brand identification through the GTIN, the DataBar on loose produce also enhances category management, said Bright. This gives retailers “a better idea of what consumers are looking for so they can set the ideal assortment per store and time of year.”

Bright acknowledged that establishing a process to code products with GTINs will be a challenge for produce suppliers. “They have to decide who's responsible and put the data into the right system,” he said. Another challenge will be “communication of GTINs through the entire supply chain.”

For their part, Bright noted, retailers will need to train cashiers to scan the DataBar and ignore the PLU, which will also be present on DataBar stickers for the foreseeable future. But Ahold's Williams pointed out that retailers may not want to retrain cashiers while the DataBar is still on a minority of produce items. “That would disrupt their rhythm,” he said.

While tests of the produce DataBar have so far focused on encoding the GTIN, Bright pointed out that its expanded data storage capability may allow other types of information to be encoded, such as traceability (country of origin, batch/lot number and serial number), promotions and consumer information (price, expiration date). However, the physical size of the sticker could be a “constraint,” said Williams, though he added that just the GTIN on loose produce will help support traceability.

Unlike loose produce, variable-weight fresh meat and poultry packaged in trays does carry a bar code, the UPC-A type 2, on the package label. However, while there is plenty of information printed on the label, very little of it is encoded in the bar code, noted Paul Lothian, senior project leader, Tyson Foods, Springdale, Ark., who also spoke at U Connect.

The UPC-A type 2 bar code contains the price of the item (which can't exceed $99.99), as well as four-digit item and one-digit vendor numbers. The latter numbers are assigned by the retailer and supplier. “We don't have enough numbers to identify products properly,” said Lothian. In addition, the weight of the product is not encoded — so there is “no information on how much was sold” — nor is the sell-by date.

The GS1 DataBar's “expanded stacked” bar code addresses these deficiencies by incorporating the GTIN, weight, extended price and sell-by date. It reduces the number of variables that must be managed from five to two (price and shelf life). Shoppers can be alerted at the POS if a product is past its sell-by date.

Lothian identified a number of potential supply-chain efficiencies that could result from the DataBar, including faster production times, longer production runs and producing to forecasts instead of to orders. “Today, we don't put labels on trays until we get an order,” he said. “With the DataBar we can get a head start.” In addition, the use of GTINs would “allow category management similar to other goods in the store.”

The DataBar can also allow additional data that would help traceability efforts, such as lot numbers, serial numbers and a GLN (global location number), Lothian noted.

Like Dole's Bright, Lothian acknowledged the difficulties in transitioning to the DataBar on fresh meat and poultry. For one thing, unlike loose produce stickers and coupons, the label on meat products will be able to contain only one type of code, requiring suppliers and retailers to “manage two different types of inventory.” In addition, equipment vendors for high-volume meat packaging are lagging in their support for the DataBar.

Lothian also identified the classic chicken-and-egg dilemma. “Until the GS1 DataBar reaches some critical mass, manufacturers will not see gains to offset capital expenditures,” he said. What would help drive critical mass is a set of guidelines as to what items will use the DataBar.

Tyson is not currently piloting the DataBar with any retailers, Lothian said. However, “we are starting to see more interest from our customers for test scenarios.”

The current coupon bar code is deficient in a number of ways, observers said. For one thing, it can't handle manufacturer company codes longer than six digits (some now run up to 12 digits). Fewer than 100 value codes representing the discount are allowed, limiting offer possibilities. Multiple manufacturers and products can't be encoded, limiting the complexity of promotions.

The DataBar, which can contain up to 70 digits, will obviate those issues. “It will allow complete offer validation [on whether] the consumer [met] the purchase and time-frame requirements,” Williams told SN last year. Manufacturers will be able to encode any discount price instead of a limited set of value codes. The DataBar will enable validation of complex promotions, such as buy X and Y and save Z.

Retailers whose POS software is still supported by their solution provider should expect to receive in the early part of 2009 an updated version of the software that supports the DataBar on coupons, said Williams.

On the other hand, retailers that self-maintain their POS solution or that use third parties to maintain a “vintage” POS solution, Williams noted, will need to set their own plans for supporting the new coupon

This advice also applies to retailers that don't employ a system from one of the major POS suppliers, such as Fujitsu, IBM, NCR, Retalix and Sweda.

“The best advice is for all retailers to discuss their needs with their POS solution providers, to ensure they have the most up-to-date information as to the [coupon DataBar] support capability of their POS software,” Williams said. “Similar discussion needs to be had with the scanner equipment providers if the retailer is unsure whether the equipment they have is capable of reading the GS1 DataBar.”

After updating their POS system to accommodate the DataBar, retailers will still need to carry out what is called “regression testing” to make sure the new capability doesn't impact any customized features already built into the POS system.