Scan artist

Retailers raise the customer experience with updated bar code technology

This article was published in the October 2016 issue of STORES Magazine.

A relatively new technology is available for retailers that helps its business users operate more efficiently — and it’s indiscernible to the naked eye. Two grocery retailers, Rochester, N.Y.-based Wegmans and New Seasons Market, based in Portland, Ore., are adopting the Digimarc Barcode, which helps minimize bar code fraud, speed up the checkout process and reduce the amount of time needed to check inventories.

Digimarc CMO Larry Logan says that a number of other retailers are either beta-testing the technology or in the process of adopting it, hoping to gain operational efficiencies that bulk up their bottom lines.

The bar code is replicated over a product’s entire packaging and can link to product information online.

Unlike a universal product code, which is positioned on a small section of a product’s packaging and can only contain a limited amount of data about any particular product, the Digimarc Barcode is replicated over a product’s entire package. The code acts as a trigger for consumers’ smartphones, linking to reams of product information such as online recipes, how and where the product was grown or produced, levels of sustainability and instructions for use.

Robert Moraca, vice president of loss prevention for the National Retail Federation, says that in addition to its marketing and operational benefits, the newest version of bar coding has the potential to reduce shrink by “eliminating or minimizing bar code swapping, as well as creating operational efficiencies in the supply chain that cause shrink because of administrative errors.”

Bar code swapping is the act of sticking a counterfeit bar code that carries a lower price over a legitimate bar code. When the item is scanned at checkout, the false price is registered, perpetrating a type of theft that appears to be the rise, although statistics on how much it is growing or what it costs retailers are not currently tracked.

Counterfeit detection

Most bar code swapping is thought to be the work of organized retail criminals, according to loss prevention sources, although it’s not limited to ORC. “If you’re an individual who has the technology and the understanding of how UPC coding works in a store,” Moraca says, “and you want to switch a UPC for a $100 item to a code that reads it as a $20 item, there are ways to do it.”

Thieves who don’t keep fraudulently acquired items typically resell them on eBay or at flea markets, or they remove the counterfeit bar codes and return items to the store for a refund at the full price. The Digimarc technology could “reduce the problem and maybe even eliminate it,” Moraca says.

“With the correct UPC information replicated over and over again imperceptibly across the entire surface of the package, the criminal act would be thwarted,” Logan says, “Our code, in essence, ‘tattles’ by first ringing up the correct price … Then the false price is subsequently rung up as the package is rotated toward the false UPC. With both prices rung up, the criminal is presented with a dilemma.” The code can only be read by an optical scanner, which many large retailers either have or are upgrading to.

The technology also addresses product counterfeiting, giving manufacturers and retailers a way to test where products within their respective supply chains actually come from through a unique, serialized code number.

The Digimarc Barcode technology was introduced at NRF’s annual conference and expo in January 2015, but was tested by retailers and their private-label suppliers as well as manufacturers for more than a year before launch, Logan says.

Expanded information

The bar code gives shoppers access to expanded product information via a Digimarc-enabled retailer or brand app. In the case of Wegmans and New Seasons Market, that information is becoming available on the packaging of their private-label and partner-brand products; Logan says that Digimarc is working with a wide variety of manufacturers and store-brand suppliers interested in adopting the technology.

Expanded product information is available on the packaging of New Seasons Market’s private-label items.

Expanded product information is available on the packaging of New Seasons Market’s private-label items.

For example, shoppers at New Seasons Market can scan the bar code on a jar of Wild Friends Foods nut butter and receive a link to a marketing message:

Keeley and Erika started creating their own nut butters while they were still students at the University of Oregon; just a few years later, they’ve created a national name for themselves with flavors like vanilla espresso and chocolate coconut peanut butter. Of course, you can’t go wrong with a classic recipe of almonds, peanuts or cashews with just a touch of Jacobsen sea salt, and that’s what you’ll find in our Partner Brand nut butters — 3 different flavors of natural, local deliciousness.

The technology also aids in building customer loyalty because it helps cashiers move shoppers through checkout faster, while making self-checkout simple and reliable at the same time. “New Seasons prides itself on providing a shopping experience that is more than just a transaction,” says Sean Teisher, senior IT director at New Seasons.

“Working with Digimarc gives us the ability to let our knowledgeable and passionate staff be the crucial customer touchpoint we want them to be. It’s important to us that our employees are able to devote their attention to customers and make sure they are able to help in any way they can.”

According to Logan, the number of items with a Digimarc Barcode scanned in one minute can increase by an average of 30 percent over those with typical UPC bar codes. That’s because checkout clerks don’t have to keep turning a package to find the UPC code, but can instead scan anywhere on the package.

In June, Digimarc announced a collaboration with GS1 US, the organization that maintains global standards for bar codes. GS1 Mobile Scan and the underlying DWCode “validates” the Digimarc Barcode, Logan says, while simultaneously making it more available to an expanded universe of retailers and product manufactures who are among the more than 300,000 member companies of GS1 US.

“The time period for retailers to get a return for their private-label items is less than a year,” Logan says, “and in some cases, it’s even more dramatic.”

Moraca says that a technology like this can “reduce an opportunity for someone to steal and could reduce losses. Criminals will go somewhere else where counterfeit stealing is easier. This will also reduce shrink from administrative losses, mistakes at the checkout and within the supply chain.”