White Paper | January 20, 2012

Retail 2D

Source: Honeywell
Honeywell Retail 2D

The current retail model is being challenged. It is a system based mainly on one dimension: the product.

According to this model, products are manufactured, distributed and sold to consumers who buy what they find on the shelves at local retail stores, stimulated by traditional promotional activities communicated using mass marketing media. It is a linear, push-based process, centered on the one dimensional (1D) EAN/UPC bar code. Over the last 40 years, the standard adaptation of the EAN code by the industry has played a key role in the huge improvements achieved by retailers in their supply chain optimization. Still, retailers today lose millions of dollars due to two main issues:

  • Excess stock of unsolicited merchandise which leads to increased discounting and lower margins;
  • Stock outs on requested merchandise which leads to reduced sales and market basket size;

Over-discounting and empty shelves are the main consequences of a retail model focused on products, where sales forecasts are based on past sales results, rather than on what consumers expect to find in their favorite stores.

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