AA receipt containing a barcode
Credits: Michael Walter

How the barcode changed business

Amid the news coverage of Brexit and the upcoming general election, you may not have seen that a US engineer named George Laurer passed away at the age of 94. His name may not be familiar, but his co-invention will be – he was one responsible for the barcode, which helped revolutionise the world of business and pave the way for some of the major advances in shopping. So, with Laurer’s passing, what better time to reflect on the success of his creation?

   The barcode was pioneered by two IBM employees. Norman Woodland came up with the idea of a barcode system, although he initially imagined it as based on Morse code, extended into lines. He patented the idea, the Universal Product Code (or UPC) in 1951, and decided that it would work better if it were printed as a circle, thus allowing it to be scanned in any direction. Laurer’s input came later on, and it was he who fully developed the idea with the help of low-cost laser and computing technology. He developed the scanner that could read codes, and insisted that stripes be used (rather than circles) because they were more practical to print. Although development was ongoing for many years, it was Laurer who fully developed the pattern in 1973.

   The first commercial appearance of the UPC was in 1974, with the code representing a 10-pack of Wrigley’s Juicy Fruit gum (the gum and receipt from this transaction are now on display in the Smithsonian Institution). Past that, IBM worked with grocery manufacturers and suppliers, figuring out how to introduce the symbol on their products – if the barcode was to be financially viable and actually produce cost savings, at least 70% of all products needed to have one.

   By 1977, there were fewer than 200 grocery stores that had a scanning machine and, after missing projections that barcodes would save the industry over $40 million by the mid-70s, some at the time predicted the demise of the barcode. This was down to an impasse between retailers and manufacturers – scanners were expensive and retailers didn’t want to buy them until there were enough barcodes to warrant it, but manufacturers didn’t want to adopt barcodes until the retailers had scanners. A Business Week article in 1976 proclaimed the barcode ‘The Supermarket Scanner That Failed’.

   But, of course, the barcode did not fail. Shops that used them were able to better chart customer habits, needs and preferences – about five weeks after a grocery store installed barcode scanners, there was typically a 10-12% increase in sales that never dropped, as stores were able to better cater for their customers. There was also a 1-2% decrease in operating cost (mainly as a result of not needing to apply price tags to every product, but also due to reduced errors and easier accounting), enabling them to lower prices and thus increase their market share. By 1980, roughly 8000 stores each year were converting, and the adoption of the barcode by the US Department of Defence in 1981 was widely seen as the catalyst for widespread industrial use.

   In 2011, Laurer stated that he was still in awe of the invention, stating: “When I watch these clerks zipping the stuff across the scanners and I keep thinking to myself, ‘It can’t work that well’.” Its phenomenal success has, however, started to prove negative for the shops – the ease of use of the barcode enabled the proliferation of the self-service checkout. Although it was actually pioneered in 1967, the self-checkouts really came into their own at the end of the 1990s, and the barcode was partially responsible. Stores are now forced to choose between the reduction of waiting time (or ‘wait-warping’, whereby a transaction seems quicker because you’re more actively involved) or the increased customer service satisfaction that comes with more staff and a personal touch.

   Laurer’s invention helped transform the shape of shopping, facilitating the turn towards self-service. The barcode, for such a fundamentally simple idea, has proven revolutionary – it may just be a few lines and numbers, but the barcode has come to mean so much more.


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