Welcome to a New Era for Printed Coupons

Two important dates affecting printed coupons have just passed. On June 30, the traditional UPC Prefix 5 barcode on printed coupons was officially retired. Coupons bearing this barcode are neither printed nor distributed anymore. As of July 1, every point-of-sale (POS) scanning system in every grocery store across the land is supposed to be able to process coupons bearing the new GS1 DataBar expanded and stacked barcodes.

Getting to this point has been a long and winding road for the grocery industry. Deciding to use the new format exclusively was announced way back in 2007. A “transition” began in 2011 and just ended. So now all trading partners are ready to reap the benefits of this new technology, right?

Not really. Oh, the consumer packaged goods (CPG) manufacturers are ready. During the transition period, manufacturers printed coupons with both the old barcode and the new DataBar. That made for cluttered coupon graphics, but was necessary because too many grocers had not modified their scanner software to read the DataBar. To get ready for the change, grocers may only need to enable the functionality in their scanning systems. In some cases, software or hardware may need to be modified. Also, databases must be updated to accept and correctly process Application Identifiers as described in the North American Coupon Application Guideline Using GS1 DataBar Expanded Symbols.

Over the years, the deadline to be ready was pushed back several times so recalcitrant retailers could catch up. Now every POS scanning system in every grocery store is able to read the new DataBar at the POS, right?

Not really. Even though there are no surveys to verify such a claim, there is circumstantial evidence. Five months ago, the Joint Industry Coupon Committee (JICC) was still urging retailers to prepare for the retirement of the traditional UPC. The JICC is administered by the Food Marketing Institute, National Grocers Association, Grocery Manufacturers Association, and the National Association of Chain Drug Stores. Why would these trade groups still be issuing such an advisory if they thought all scanning systems were ready for the DataBar?

As recently as last month, Daniel Triot, senior director of the Trading Partner Alliance (TPA), addressed this issue in a blog on the GMA website. He wrote: “Retailers are encouraged to implement and activate these technologies as soon as possible in order to process coupons seamlessly and to avoid a disadvantaged position in the market place.”

What disadvantaged position? First, there are redemption efficiencies. Also, the GS1 DataBar will reduce incidences of unintentional coupon mis-redemption as well as intentional coupon fraud, especially coupon decoding.

Other benefits include:

• Automatically checks coupon expiration date 
• Automatically ties double-coupon value limits to exact purchase requirements
• Reduces cashier intervention with complex offers placed within the code
• Allows for retailer-specific coupons

JICC says failure to transition to the new coupon technology exposes retailers to a number of risks, including:

• Processing of expired or fraudulent coupons
• Inability of customers to use coupons at self-checkout kiosks
• Reduced profitability of promotions

The GS1 DataBar conveys more information about coupon deals because it can carry as many as 74 numeric characters, compared to 12 on the old UPC barcode. For instance, manufacturers can provide more precise offers, enforce expiration dates systematically, and accommodate compound offers such as “buy this and this, and get that.”

I believe that most supermarket retailers – certainly the large chains – are now ready to process the DataBar, but not all of the smaller independents are because of the costs involved in the changeover. My hunch was confirmed by the POS experts at Boston Retail Partners. But if the DataBar improves the overall shopping experience by making coupon processing simpler and quicker at the POS, what happens if the scanner can’t process the new barcode? Cashiers will just manually key in the code. Such a solution will inconvenience shoppers and will not give grocers the benefits of this new technology. Let’s hope that will change soon.