Navigating the Opportunities of GS1 Digital Link: How Retailers Can Enhance Inventory Management and Consumer Engagement
In 2024, retailers navigated relentless inflation, ever-changing consumer trend cycles and persistent supply chain challenges. These hurdles may evolve, but they won’t disappear in 2025. Retailers must continue to continuously improve and manage inventory to lower costs and reduce waste amid rapidly changing consumer preferences, as well as uncertain geopolitical conditions that can exacerbate pricing pressures, profitability and operational efficiencies. Additionally, they must win over shoppers who have even more choices and are grappling with rising costs of living. It’s a tall order, but sometimes the most transformative tools are closer than we think. The 2D Digital Link barcode (or QR code) on packaging can unlock new, streamlined pathways for enhanced inventory management and consumer engagement, empowering retailers to meet the demands of a complex market and succeed in a changing world.
Understanding 2D Barcodes and the GS1 Sunrise 2027
Two-dimensional (2D) barcodes are graphical images that store large amounts of product data for access by consumers and workers. The use of 2D barcodes on product packaging enables retailers and brands to evolve as the world becomes more digitized and consumers demand access to more product information while making purchasing decisions. For workers, compared with the currently used standard UPC (1D) barcode, 2D barcodes enable a single point for retailers to access much more product information like inventory levels, sell-by dates, country of origin, and recall notices. This presents numerous opportunities for retailers to gain efficiency and decrease costs, reduce waste and enhance promotions.
However, adoption of 2D Digital Link barcodes will take time and guidance. GS1 is the global organization for data exchange standards and the organization behind GS1 Digital Link, the standardized model for encoding information within a 2D barcode, which can be scanned at checkout and connected to online information. Recently, GS1 activated the Sunrise 2027 to encourage the widespread adoption of specific GS1 standards for Digital Link to enable barcodes to become digital web links, connecting products to digital information, enhancing consumer engagement, improving supply chain efficiencies, and strengthening brand loyalty. The initiative encourages widespread use of Digital Link on product packaging by 2027, with retailers able to scan both the 2D Digital Link and traditional UPC barcodes at the point of sale (POS).
Throughout this transition, retailers should keep three priorities top of mind for success: enhancing inventory management, supporting retail brands and engaging consumers.
Digitizing Inventory Management
Inventory management is an arduous process – from demand forecasting to tracking and manually managing inventory. Given the intricacies, retailers can face challenges with inaccurate data, unplanned product waste or scrap, and limited visibility of key product details. However, retailers can reimagine inventory management with 2D barcodes.
A key benefit of GS1 Digital Link is the ability to store more important product data within a 2D code, including stock-keeping unit (SKU), sell-by dates, point of origin, and much more. By accommodating more data with a single barcode, retailers can boost efficiency by reducing manual inventory and easily accessing product journey data to optimize product inventory based on sell-by dates, reduce in-store expirations and even facilitate real-time recall alerts to speed recovery of any compromised products.
Amplifying the Value of Private Label Products
When it comes to store brands, the retailers are in the driver’s seat from end to end of the supply chain, unlocking even greater supply chain transparency, traceability and control to gain efficiencies in inventory management. Through increased inventory visibility, retailers may be able to more swiftly identify and plug any holes left on shelves by name brands.
Additionally, retailers can ramp up sales of their own brands by leveraging the promotional opportunities facilitated by 2D barcodes. In the battle to win over consumers, retail brands can leverage the added capacity for product information in a Digital Link barcode to educate consumers on the craftsmanship, quality and ethical standards behind their own product offerings.
Retailers can also differentiate their brand offerings through unique digital experiences and value-added features like recipe ideas (dynamically changing depending at what hour of the day you scan the code) for various foods, tips and hacks for personal care or cosmetic products, or recycling or disposal instructions that provide engagement and incentives to customers for increased brand loyalty and repeat conversion.
Creating a Feedback Loop With Shoppers
Integrating 2D barcodes with loyalty programs also enables efficiency and increased customer satisfaction. Post-purchase, automatic delivery of points based on dollars spent can incentivize customers to purchase repeatedly. Additionally, retailers can open a two-way communication channel with customers by incentivizing feedback, allowing customers to share thoughts, comments and questions about products.
Hit the Ground Running
GS1 Sunrise 2027 may seem far off, but retailers are starting the planning and transition today, as the holistic effort needed to make this transition a success will take significant time and dedication. With collaboration across the supply chain, high-quality data and interconnectivity, retailers will be well positioned to succeed in the GS1 Digital Link transition to provide more engagement and value to their customers, as well as to improve their overall operations.