Ready or not, North American retailers will be hit with a new-look manufacturer coupon this year.
After a one-year delay, manufacturers were given the go-ahead by the Joint Industry Coupon Committee (JICC) to start using the GS1 DataBar — an information-packed bar code in a small footprint — alone on coupons beginning Jan. 1. Given ample notice of the impending change, retailers were expected on that date to have in place the scanners and POS software needed to scan and process coupons bearing only the DataBar.
But there is still some leeway as the absolute deadline for retailers and manufacturers to transition to a DataBar-only coupon system is June 30. After that date, coupons can no longer include the UPC-A bar code that retailers have been scanning for decades and that has been sharing coupon space with the DataBar over the past two years.
Up until June 30, manufacturers and other coupon publishers can remove the UPC-A code from coupons at their discretion. But the JICC is “strongly recommending” that manufacturers first confer with their retail trading partners, particularly smaller retailers, about their readiness to scan the GS1 DataBar, said Steve Arens, director of industry development for GS1 US, Lawrenceville, N.J., which oversees bar code standards in this country. At stores that can't scan the DataBar on coupons, cashiers will have to manually validate and enter the value for coupons that no longer have the UPC-A symbol; self-checkouts will require some kind of employee intervention.
The adoption of the DataBar comes at a time of heightened use of coupons by hard-pressed consumers, as well as the digitization of manufacturer coupons online (some of which use the DataBar), on loyalty cards and on mobile devices.
The JICC, which includes representatives from the Grocery Manufacturers Association, Food Marketing Institute, National Grocers Association, National Association of Chain Drug Stores and GS1 US, adopted the “expanded stacked” version of the DataBar, with up to 74 numeric characters, to replace the UPC-A code in 2007. Since then, both bar codes have been used on coupons to give clearinghouses a chance to begin scanning the DataBar.
Manufacturers had previously attempted to incorporate additional information in GS1-128 bar codes on coupons, but most retailers did not choose to adjust their systems to read those codes, noted Allan Williams, vice president of application development for Ahold USA , Landover, Md., and co-chair of the JICC.
Some retailers began scanning the DataBar on coupons last year. For example, Kroger  said last June that it had implemented coupon DataBar scanning in a few hundred stores, with cashiers given the option of scanning either the DataBar or the UPC-A code.
The DataBar is designed to encapsulate a great deal more information than the UPC-A code. For example, it accommodates longer manufacturer identification numbers (MINs), addressing a major deficiency in the UPC-A code. Manufacturers will have the opportunity to develop more robust coupon offers, including values in any amount up to $999.99, as well as cross-promotions with one or two other brands.
Retailers that scan the DataBar will experience automatic expiration date checking, a reduced need for 992 bypass codes that don't require product validation, reduced cashier intervention, improved scan rates and increased speed of checkout, according to the JICC. The DataBar also contains fewer human-readable elements — only the company prefix and the offer code — helping to reduce fraud and mis-redemption.
Last October, the JICC called for industry comment on a proposed reduction in the size of the DataBar that appears on coupons. The change, proposed by GS1 US, would reduce the width of the bar codes by about 20%, enabling them to fit on smaller coupons and free up space on larger coupons for more promotional messaging. The JICC is currently reviewing the comments received from the industry, said Williams. “It's a work in progress.”
Coupons are not the only vehicle for the DataBar. A different form of the DataBar is also increasingly present on stickers — which also contain a price look-up number (PLU) — attached to loose produce. But no sunrise date has yet been established for leaving only the DataBar without the PLU on these stickers. (See “Wanted: GTINs for Produce” here .)
READY TO GO
The transition to DataBar-only coupons, originally set to take place in 2010, was postponed for one year after an industry survey in 2009 indicated an insufficient level of POS readiness on the part of retailers, especially smaller retailers. In addition, not all POS system vendors were offering DataBar-ready equipment and software.
But last year, the JICC conducted another survey of retailers across several channels and this time the results were “very encouraging” that retailers would be ready to scan and process the DataBar during the phase-in period between January and July 2011, said Arens, who declined to provide specifics. “A high percentage of retailers will be ready in January,” said John Morgan, executive director, Association of Coupon Professionals, which was privy to the results of the JICC survey.
“The major players are there — or will be,” said Williams. Some multi-banner retailers are experiencing different levels of readiness among their banners, which may use different POS systems, he added.
Still, there remains some concern about whether a sufficient percentage of smaller independent retailers is prepared for the DataBar. In a survey conducted early last year by NGA, just 62% of independent retailers said they would be ready for the DataBar by January 2011. That level of readiness among independents remained “along the same lines” last month, said Peter Larkin, president and chief executive officer of NGA. The economy has made it hard for some independents to finance upgrades in their front-end systems, he noted, adding that other POS issues, such as PCI data security compliance and impending changes in interchange rates, have also intervened. “It's a lot for a single-store operator to focus on in a short time period,” he said.
Nonetheless, the NGA board “firmly supported” the January 2011 implementation date at a meeting last September, said Larkin. “That is a good indication that this industry is supporting the date and working towards having everything ready to go.”
Over the past year, the NGA has actively communicated to its independent members that “the change is coming” while educating them on what the DataBar is and what they need to do to get “up to speed,” he said. For example, NGA has partnered with equipment manufacturer Pan-Oston, Bowling Green, Ky., to help retailers determine if their systems are DataBar-ready. The effort appears to have had some effect as Larkin said he has been receiving fewer calls on the topic of late.
The independent retailers served by Bozzuto's , a Cheshire, Conn.-based wholesaler, “are ready” for the coupon DataBar, said Steve Methvin, the company's vice president of retail technologies and ecommerce. Bozzuto's gave retailers access to its POS lab for testing, scanner/scale replacements and POS upgrades. Cashier training was not a major issue, added Methvin, “because the standard process for accepting coupons has not changed.”
Some of Bozzuto's smaller specialty retailers still need to update their systems, “but they do not see the DataBar as a strategic tool for sales,” Methvin said.
United Supermarkets , a 50-store chain based in Lubbock, Texas, is also ready for the DataBar, said Chris St. Clair, executive vice president, information and logistics. All it took, he said, was the installation early last year of a software patch release from the chain's POS vendor, Retalix, Plano, Texas. “There was no change on the scanner or POS systems other than the patch,” he said.
The DataBar “works fine” on United's newer scanner/scales, “but we do see a slight [processing] delay on older scanner/scale models,” said St. Clair. The delay is minimal under the current scope of DataBar implementation. As that scope evolves, the chain may consider replacing the scanner/scales, he said.
It is not clear how many manufacturers have begun removing the UPC-A from their coupons this month. Arens expects the switch to the DataBar to occur more toward June. Larkin said he has heard that “most CPG manufacturers are unofficially marking July 2011 as the implementation date and treating January to June as a trial run.” During that period they are getting coupon artwork ready, preparing internal departments and working with trading partners, he said. “So there's a little more time for retailers to get ready.”
Williams anticipates that the transition to DataBar-only coupons “will be a relatively slow process” during the 2011 phase-in period. The move this year is “more disruptive” than when DataBars were introduced to coupons in 2008, so “manufacturers are taking a more cautious approach,” he said. “Nobody wants to cause any harm.”
On the other hand, added Williams, some manufacturers may soon begin employing DataBar-only coupons on a regional basis after confirming the readiness of retailers. “They want to get space back for more marketing messages,” he said. They also seek the greater accuracy and promotional flexibility offered by the DataBar.
Charles Brown, vice president of marketing, NCH Marketing Services, Deerfield, Ill., estimated that there will be “a significant amount of new coupons distributed with only the GS1 DataBar code by the spring time frame this year.” But he added that the industry won't achieve “critical mass” of DataBar-only coupons redeemed at the POS or processed through the clearing and settlement processes until well after the June deadline. “It will take some time for consumers to use the coupons they have clipped.”
CUSTOMER SERVICE ISSUE
If retailers find they can't scan one or two DataBar coupons during the transition period, “it won't upset the balance of nature,” Williams noted, adding that some coupons have lacked bar codes and required manual handling.
However, once DataBar coupons start flooding the marketplace, unprepared retailers will be at a disadvantage, observed Larkin. In addition to slowing down the checkout process with manual entering of coupon values, these retailers may miss out on the more complex promotions available through the DataBar. “We are concerned that independents won't be able to offer the same level of service to the customer regarding coupons,” he said.
Methvin agrees that poor or no implementation of the DataBar will be a customer service issue. “Slower checkouts from non-scanning coupons or confrontations regarding eligible coupons will not win any points for outstanding customer service,” he said.
In addition, many of the new initiatives and technologies aimed at reducing coupon fraud and enhancing food safety and traceability in fresh foods are based on the DataBar. “Those issues are of great concern to our members and we wouldn't want them to miss out because they don't have the right equipment,” Larkin said. He also doesn't want consumers to feel that independents don't have the same safeguards in place that larger chains do.
Retailers that can't scan the DataBar will miss other advantages. For example, the DataBar will sharply reduce the number of 992 bypass codes on coupons, which compel retailers to offer a discount without validating whether the promoted product was purchased. The 992 code has been used, for example, when more than one company is part of the coupon offer, because only one company can be represented in the UPC-A code. But since the DataBar can handle up to three MINs, product validation is no longer a problem in that case. “This is good for retailers, especially if they multiply coupon values,” said Williams.
Williams pointed out that a retailer could choose not to validate what's in the DataBar — such as the expiration date or multiple product purchase requirements — just as some retailers don't validate the family code in the UPC-A code. “Compliance is voluntary — there's no coupon police,” he said. “But then they would be at risk for not meeting the manufacturer's requirements and not getting reimbursed.” Most mainline retailers intend to comply, he added.
Manufacturers stand to gain more from the DataBar on coupons than retailers will, said Williams. (Retailers with private-label programs would have the same benefits as manufacturers.) But looked at more broadly, the benefits even out once retailers start to gain from DataBar applications on produce and other fresh products, he said. “Our advice to retailers when this journey started is that their perspective should be broader than just coupons.”
Methvin acknowledged that the ROI for the DataBar will be hard for retailers to track. “We should see faster and more accurate reimbursements, but the recent increase in total coupon usage and the growing risk of Internet coupon fraud may skew the numbers.”
United Supermarkets' St. Clair believes the payback for the DataBar “will come primarily with improved coupon validation and reduced coupon fraud, followed by more accurate produce movement through scanning.”