Why manufacturers and retailers should prepare for GS1 Digital Link 2D barcodes right now

Maintaining customer loyalty, streamlining product recalls, adapting to changing consumer behavior, reducing waste and combating theft: manufacturers and retailers are under constant pressure to find new ways to address key challenges. The drive to use 2D product codes as a result of new standards may prove to be an advantage in this process.

The first of these is the GS1 Digital Link, the result of global standards organization GS1's move from 1D barcodes to a new 2D barcode format. 2027 will be the official sunrise period for Digital Link 2D codes, when the global industry must ensure 2D codes are accepted at point of sale (POS) by the end of the year.

The change will upgrade barcodes from the traditional 1D barcode with its Global Trade Item Numbers (GTINs) of 14 digits, to a unique 2D barcode including the GTIN, as well as a significant amount of additional embedded data that retailers and consumers can use. use. Because it is the first time that digitally connected products and dynamic or "hot data" will be established as a global standard, this change will mark a crucial shift in product identification. As an important step toward making significantly more product information accessible throughout the supply chain, it also presents significant opportunities for manufacturers and retailers.

The GS1 Digital Link is not the only new standard with the potential to bring additional benefits to retail companies. The EU's Digital Product Passport is expected to take effect from 2027 and change the way retailers, manufacturers and other companies share product information in the supply chain, especially in the area of sustainability. The Digital Product Passport will essentially be a digital twin of a product linked to the physical product through data identifiers and carriers, for example QRs and RFID tags, to collect and share key product data from all stages of the supply chain in order to improve product circularity. The DPP will include essential details such as unique product identification, compliance documentation and information on substances of concern. It will also include user manuals, safety instructions and product disposal guidelines.

The rollout of DPP is already upon us: the first products, car batteries, should have DPPs from 2026, followed by all textiles, clothing and shoes in 2028. The EU currently plans almost all products, except food, feed and pharmaceuticals, to have DPPs by 2030.

While these changes may seem daunting at first, taking the right steps in response will benefit both retail companies and their customers. A crucial advantage, especially of the GS1 Digital Link 2D codes, is the ability to enclose a greater amount of personalized and variable information in a single code. This creates connected products that can be easily used by different stakeholders.

What does the emergence of 2D code as a standard mean for the FMCG market and their producers and retailers? For brands producing food products, especially those with short shelf lives, 2D codes offer better answers to problems such as managing prices in response to changes in demand, reducing waste, speeding up the product recall process and combating theft. By overcoming the limitations of static information, the use of 2D codes can enable the brand to add more accurate shelf life or expiration dates, down to the level of the individual unit number. Yet another benefit of the dynamic nature of the GS1 Digital Link is the more adaptable product branding for products subject to change in composition, such as wine. This potential for late-stage customization of label information via the 2D code can make achieving compliance easier and broaden the range of information provided to consumers.

All types of FMCG companies can take advantage of the GS1 Digital Link to reshape their approach to product packaging. Moving beyond the limitations of having to include the full ingredient list in multiple languages on packaging, companies could potentially benefit from more design space for more powerful and sophisticated branding in the future. This would allow them to optimize their SKU inventory, even going so far as to remove the entire packaging material, if appropriate and compliant. It would also allow companies to reduce the environmental impact of their packaging, optimize inventory levels, potentially save space, and thus be able to respond even faster to changes in demand.

Retailers and manufacturers are constantly hampered by complex data management processes and reliance on centralized systems. Depending on the scanning device, 2D code addresses these challenges by enabling a single QR code to deliver a wide range of information, giving each product a unique identifier. As a result, consumers can quickly and easily access nutrition charts, expiration dates, recall warnings and promotional offers on their smartphones. Additionally, because only one QR code measuring at least 2 cm x 2 cm is required to ensure scannability, companies benefit from accurate product information available at every stage of the supply chain and in as many languages as needed. All this not only means that consumers have easier access to much more relevant data within seconds with any smartphone, but retailers can also authenticate products, track their origins, better manage inventory levels and more accurately adjust and update them in response to issues. changing market demands.

From "misleading" to "non-misleading" counterfeits, many brands are concerned about the potential impact of counterfeit products. Once again, the standardization of 2D codes indicates an important change in addressing this problem. The precise, unique product identification they provide increases companies' control and visibility at every stage of the supply chain.

Slow and costly product recalls can be transformed by the added information and more accurate tracking provided by 2D codes. 2D codes benefit US-based FMCG producers and manufacturers in yet another way by enabling the Food and Drug Administration (FDA) Final Rule on requirements for additional traceability records for certain foods, also known as the Food Traceability Final Rule. These regulations require companies to track the movement of certain fresh food products, from fruits to fish, at every stage of the supply chain. QR codes are recommended to ensure a high level of traceability and speed up the localization process from days to just a few hours. This improvement could potentially allow retail companies to avoid contamination outbreaks and costly lawsuits, giving them a higher level of protection.

2D codes are better for traceability than serialized 1D barcodes for a number of reasons. Most importantly, they can ensure that important product and supply chain information is easily accessible beyond the company's production systems to companies and their customers. They also allow the use of the smallest possible print size, allowing a greater amount of information to be included on packaging. Another advantage of 2D codes over serialized 1D barcodes is that, even if partially damaged, they can still be read.

Positive customer perception is critical for any retailer. 2D codes represent a valuable step forward in traceability for many types of businesses. This end-to-end visibility provides better protection against product counterfeiting, maintaining brand integrity and customer loyalty while protecting profit margins.

2D codes also offer new and exciting ways for retail brands to increase brand awareness and, more importantly, authentication and visibility. Their value in connecting physical products with digital content means that companies can create product marketing content that is both broader in scope but also more precisely targeted to match the interests and tastes of specific demographic groups.

For brands, the dynamic nature of 2D codes offers endless opportunities for branding and B2C marketing, whether it's using a single URL that takes consumers to a carefully curated website that showcases each stage of product development, or delivering personalized post-purchase content to build on a customer's emotional investment in a brand. At a time when consumers are making their purchase choices more carefully than ever, the ability to connect with them in a meaningful way, both inside and outside the retail environment, is immensely valuable.

For all retailers, a top priority should be updating their point-of-sale (POS) and mobile POS infrastructure so that their systems can read and process 2D codes and associated attribute data before 2028. Retailers must also ensure that they have the technology to print and code individual items in 2D and with dynamic information at high speed. In addition, companies must ensure that they can leverage all available data by ensuring that their inventory, supply chain management and merchandising systems are fully integrated.

In terms of business planning, the rollout of both the GS1 Digital Link and Digital Product Passport is imminent. By taking the right steps now, retailers and retail brands can take full advantage of the benefits of the 2D code.