Did you know that those small black stripes that help identify products at retail malls have been in existence globally for 35 years now? Known as barcodes, not only have they been thriving for over 10 years in India alone, but also have stood their ground in the face of newer and smarter technologies like radio-frequency identification, which promised to revolutionise the retailing sector.
It was in 1998 that the national IT task force laid down a clause that made the use of barcodes compulsory for all products. Sudhir Rao, managing director, Bartronics, reminisces those early days when most of his time went into telling corporate houses how these barcodes could help reduce cost and bring in efficiency.
"We were perhaps the earliest one to provide barcoding technology in India way back in 1990. The first five years went into educating corporate houses, lobbying with the government and getting a standardisation," said Rao.
The Tata Group and ITC were the earliest to use barcoding for tracking their employees. The success of this was followed by deploying barcodes in factory at material level and finally, these conglomerates asked vendors to get compliant with this technology.
While the manual tally of products still continues in India in smaller retail outlets and countryside, barcode usage has grown exponentially. There is no independent study that talks about the size of the barcode industry in India. But it is estimated to be around Rs 250-300 crore (Rs 2.5-3 billion).
"The real explosion in barcode adoption started only from 2000 onwards. Since then the market has been growing 60-70 per cent. But over the last two-three years, that number has come down as the base has gone small due to adoption," added Rao.
However, while barcodes have been used by almost all the retailers, standardisation remains a challenge even after over a decade of use. Standardisation means having the number 890 (stands for India) as the first three digit of the 13-digit number below the barcode.
"There is not a single product in the country that does not carry a barcode, but the problem is of standardisation," admits Ravi Mathur, chief executive officer of GS1 India. The organisation along with industry bodies such as Ficci, CII and Assocham has been striving to get this in order.
Promoted by the Ministry of Commerce, GS1 India was set up in 1996. It was only in 1998 that GS1 actually started operating and focusing on standardisation. "Over 90 per cent standardisation has been achieved among food and FMCG segments. Within the apparel segment, the next big retail sector, standardisation has reached 35-40 per cent," said Mathur.
But the general merchandise segment comprising jewellery, leather products, appliances and others is yet to jump on the standardisation bandwagon. They currently use proprietary barcodes. Hence, the market for barcodes is still huge.
"The total retail segment is worth $350-390 billion and retail products constitute 90 per cent of it. That's the opportunity for the application of barcodes," said Retail Association of India CEO Kumar Rajgopalan.
While the barcode is grappling with standardisation, RFID has started to make its presence felt. It's a technology similar to barcodes, except that it allows passive object tagging. In case of RFID, since it uses radio frequency, the tags do not need to be in the line of sight of a reader to be read.
These tags have small radio transmitters on them with a unique identification number. So, when the product passes through a reader, the data is transmitted to the computer, which matches it.
Unlike a barcode, an RFID has a larger capacity to store data. Experts say that in case of RFID, multiple tags can be read simultaneously. However, Praveen Kishore, vice-president, Bar Code India - provider of barcode and RFID technology in India - believes that RFID is a niche technology, which may not be applicable in all situations.
Pricing is another issue that has deterred corporate houses and supply chain managers from using RFID at the retail level. "A single RFID (active) tag still costs between Rs 30 and Rs 40, whereas one barcode costs a retailer less than a rupee. Even a passive tag costs over Rs 10 on an average.
Again, finding the market size of RFID is difficult as no study has been carried out. But industry experts say that the RFID market in India should be around Rs 200 crore (Rs 2 billion) and growing.
"RFID cannot make sense to a small retailer. But the technology is being used by firms that have large supply chains to manage like the Indian Railways, Containers Corporation or ports," said an analyst.
