The Next Barcode Revolution?

The introduction of bar-code scanners 40 years ago made Target, Walmart and other big-box retail operations possible.

Initially, the system was costly and cumbersome, but it provided tremendous insight to merchants who were trying to manage the stock of products in their stores.   

Before bar code data became available, a retail merchant would need to dedicate hours of individual effort every week just to figure out which products had been sold in what quantities, so the products could be ordered and re-stocked.  “Inventory time” was a regular activity that would sometimes shut down a grocer or a small retailer for as much as a day at a time.  Some stores would regularly open late on Saturdays just to allow clerks and managers to figure out what products they still had on hand.

But while all retailers benefited from barcode scanning technology, the biggest advantage, in terms of efficiency, went to larger stores. After all, if you had thousands of products, rather than just a hundred or so, it was way more useful to be able to assess your remaining inventory by using automated data.  And it was obviously more convenient for shoppers, too, because a cashier could scan a bar code and immediately find the right price. Prior to bar codes, the fastest check-out lines were the ones that employed clerks with the best memories, and no one would be able to memorize all the prices on the products a modern grocery store would have, much less a Target, or Walmart.

In fact, the bar code revolution made possible a whole new kind of retailing operation – one that was efficiently managed, with more or less real-time inventory information and useful insights into product demand, not to mention customer convenience. And according to Steven Johnson’s book How We Got to Now,

The decades after the introduction of the bar-code scanner in the United States witnessed an explosion in the size of retail stores; with automated inventory management, chains were free to balloon into the epic big-box stores that now dominate retail shopping. Without bar-code scanning, the modern shopping landscape of Target and Best Buy and supermarkets the size of airport terminals would have had a much harder time coming into being.

But the “Internet of Things” is poised to provide an even more transformative revolution in retailing than the barcode scanner did. We are only a few years away from 20 or 30 billion devices being connected to the internet. Initially, the devices to be connected will consist of those that need occasional repair or servicing, or that provide data on operations or useful data for other devices. But it may be as little as a decade or so later that virtually every manufactured product will have some type of connection to the internet, including even the routine household items that you purchase in a store, from socks to cereal boxes.

Obviously, this has several significantly transformative implications:

• Even the tiniest, one-person retail operations will have access to the same basic merchandising efficiency as big-box retailers have access to today. Imagine a coke bottler delivering just the right replenishment to a corner store, without the store ever having to place an order.
• Consumers won’t have to “check out” of a store at all. The products themselves will bill a customer’s account and remit the funds to the retailer, perhaps after receiving approval from the consumer’s smartphone app.
• Products purchased in association with one another (bacon and eggs, hammers and nails, potting soil and pots, clothes and accessories, etc.) will coordinate their inventory levels to ensure a continuous supply of each.
• And e-commerce will merge more or less completely with bricks-and-mortar commerce, as merchants have seamless access not just to their inventories, but to the identities of the individual customers who buy each of their products.