Invisible Barcodes: The Innovation You'll Never See (And That’s The Point) | Ask An Expert

Foreign.

Welcome to another exciting and elucidating episode of the Omnitalk Ask An Expert series.

I'm your host, Chris Walton.

And I'm Anne Mazinga.

And we are the founders of omnitalk, the fast growing retail media outlet that is all about the companies, the people and the technologies that are coming together to shape the future of retail.

Now, omnitok fans, there is a new technology out there and no matter how closely you look for it, you won't see it.

And that's exactly the point.

It's often called the invisible barcode, but actually watermark is the more appropriate term.

And to help us shed light on what it is and how it works, we have brought in quite possibly Ann, the foremost expert in the world at rolling out invisible watermarks to retail stores.

The former VP of IT and store innovations at Schnooks, Dave Stack.

Dave, welcome to the show.

Welcome back to omnitalk.

It is great to have you.

How are you doing this morning?

It is great to be back.

And I was wondering who you were talking about because it can't possibly be me.

The foremost expert in the world, Dave Stack.

He's such a Renaissance man that there's so many ways he could be introduced, like master woodworker, master mixologist, mixologist.

In this case.

In this case, we're going to be talking about watermarks.

And, and Dave, thank you.

Thank you so much for joining us.

It's always great to be with you too.

Well, before we get started here, I want to give a big thank you to Digimark, who is nice enough to help us secure Mr.

Stuck today for this conversation.

And just a reminder, I'm sure tons of you are going to have questions as we go along today, so go ahead and pop those questions in the chat.

The digimarc team and Dave will be ready to take any questions that you might have in the text chat just to the right hand side of your screen.

Well, Dave, let's get started.

Can you just break it down for us and tell us what an invisible watermark is exactly and how it works?

Well, now that you sold me as the foremost expert on this and I'm going to start off bumbling now.

I.

Think the best way to look at it is.

It is, you can call it an invisible barcode, but it is a manipulation of the product packaging at the pixel level to embed a unique sequence into that package that is completely undetectable.

And it can be read by your flatbed.

Your scanner scales at the front end can be read by the hand Scanners as well.

And it's on all sides of the packaging.

So it's pretty hard to not put an item there and have it scanned.

So it makes sense.

Like it's just kind of, it's, it's embedded in the packaging.

It's invisible to the naked eye.

So then what is the, what is the use case that, that you have the most experience in and why we called you the foremost expert in the world?

What is the use case in which you have experience deploying invisible watermarks in retail stores?

So I started off, actually looked at digimark years ago and I was, you know, for me it was a solution looking for a problem.

I believed that that technology was, was going to be great and I just, I couldn't come up with at that time a use case that I felt would, would work for, for my former employer.

But I started getting a lot into, into loss at the front end and understanding how theft was occurring at the front end.

I watched more ever seen videos than Asset Protection did and I realized that people were taking a lot of these non barcoded items and putting them on the scanner scale and saying they were bananas.

So we use Piccadilly salad bars for our salads and Piccadilly has their own container on the, on the, on it.

And then we have our, our wing containers and whatnot for the, the hot wing bar and they either turn into bananas or they turn into Kool Aid and it's just another level of control.

So you know, if you have ever seen great, ever seen is going to say hey, those aren't bananas.

But then you're down to that attendant who's your, you know, your final level of security to say okay, that what you put in the bag there, I need to take that out and put it back on, on the scale which can be a confrontation point for, for the attendant.

And you know, maybe they don't feel comfortable doing that with a customer.

Well if you can avoid that completely and they put that on the scale before they even have a chance to say they're bananas, it's already rung it.

Got it.

And so for those, for those in the audience that might be unfamiliar with Everseen, Everseen is basically Dave Wright's the visual computer vision technology that you put in and around the self checkout to watch what's happening at the self checkout machines.

And what you're essentially saying is that there are some items, particularly items from the salad bar where people had historically, you know, tried to ring up their salad that they were Buying for lunch as a, as a bushel of bananas instead to pay like a dollar versus, you know, whatever you charge for the salad.

And so, so that's the use case that you're talking about here because essentially, Dave, what you're getting at too, right is the Everseen solution is, is great at helping you detect the theft, but actually preventing it requires another step.

It can help with that too.

But you're saying the digital, the digital watermark then enables you to, you know, just basically lock out the action of theft at the register, is that right?

Yeah, that's correct.

It just solves the problem before it gets started.

Got it.

So what does it take to actually implement these then, Dave?

I mean that use case seems pretty clear and I imagine there's a lot of use cases in a grocery operation that are similar to that.

What does it take to be successful with them?

How did that work start to finish?

I mean it sounds like you are always interested in the technology, but what did it take for you to actually bring this, you know, to scale?

It's actually really easy.

From a, from a perspective of what we needed to do within the store, it wasn't much.

We use the Zebra scanner scales, the MP7000s and I, I know that Data Logic has the, the same capability as well, but for us we got a barcode from, from Zebra and we scan the barcode over the scanner scale and poof, the watermarks activated on this, on the scanner scale.

So it's from a in store viewpoint, simple.

Then what we had to do was, was working with, with Piccadilly.

I had to forge the relationship between Piccadilly and digimark was working to incorporate that into, into the brand packaging and it's not, it's, I think a lot of people think, oh well, it's, it's a whole printing exercise that I have to go through.

Well, digimark does that.

You know, Digi, digimarc does the work on, with the brand to incorporate the watermark into it and get their proofs together and then they send it to the printer and then the printer's just printing it.

So there's nothing special from the printer, printer's perspective.

So.

So it doesn't change the printing process at all then.

Dave, just real quick, I just wanted to.

So it doesn't change the printing process, it just digimark just embeds themselves in what they send over to the printer.

Yeah, it's in the artwork that they send to the printer.

Wow.

And Dave, what kind of products is this useful for like, you know, where you started with Piccadilly.

But like where did you see other use cases or other product sets that you could kind of apply this to?

I think anything that's weighted is especially.

There's a lot of loss around weighted items that turn into something else.

And you know, we use.

So we use it on, on our, on our wing bar items.

We, we had, we had a, I guess a medium sized wing bar container and then a, a large size wing bar container.

We had hot and cold on those and then we had what's called a black clamshell, which is the Styrofoam container, which was our small.

Okay.

Same thing was happening on that.

So we've actually in those containers are coming in in July.

We've dropped the black clamshell and in July.

Wow.

I keep talking as though I'm the current currently working.

It's okay.

It's okay.

It'll get easier over time, Dave.

It'll get easier over time.

We're going to drop the black clamshell and go to the small wing container with a, with a watermark on it as well.

But then you can expand it out from there.

If you look at other, other things that are weighted.

Yeah, bakery items, donuts, donut bags, donut boxes could embed it there.

You could in donuts while they're not weighted, you can still embed it there and have people actually scan it.

Because sometimes the, if you give the ability for somebody to enter the plue at the self checkout.

Right.

You will find that items that used to be rung as bananas are now being rung as donuts and they're, they're not donuts.

So take the plu entry away, have the item get onto the scanner scale so that it's red.

Then you can, you can do some sanity checks and say, okay, you said there was one donut, but why does that bag weigh five pounds?

And you can do an intervention there.

Also where I'm really interested in is on packaged meats that you're producing in the store as well.

I was thinking about that.

We used my former employer.

I'll get there, Chris.

We used the GS1 stack data bar, which is great, but the more you embed in the GS1 stack data bar, the bigger that data bar gets.

And at too deep on the data bar, a wrinkle is terrible.

And then you end up doing manual store rings on that.

Well, eliminate the barcode altogether and go with a watermark and print that on your label and embed the weight and the Expiration date and everything else that you need within a watermark that nobody knows is there.

You'll have to do a little bit of customer training on that because they're going to go, well, where do I scan this?

But eventually people do.

People are trainable, believe it or not.

Yeah, well, that, that's the interesting thing too.

And Dave, I mean you're like a week, you're like a weak former at Schnooks too.

So we're going to give you some credit for that.

So we give you some time to acclimate to, to your new new position in life.

But, but the other part about this that I really like, which you kind of brought up there at the end a little bit tangentially, is for those ethical customers that are not trying to game the system by, you know, scanning bananas when they're actually trying to buy a salad.

Over time, this actually introduces the idea of a simpler, faster self checkout experience for the average consumer too.

Right, Dave?

Yeah, it is.

Especially those items that you don't buy every day.

Most people know what a banana is.

4011.

Right.

So they can enter that or it's easy because it's a frequently bought item on self checkouts and most of the time self checkouts learn what's what you purchase there so that the menu item is going to show bananas first.

But yeah, when you have that infrequent item, you're like, okay, what the heck is this?

And you're looking on the container or you have to do the product look up, it's just easier.

Set the thing on the scale and you're done.

So quick, Ed, what's the PLU for tomorrow?

God, I know.

I was like, Dave, I have a lot of things trying to be stored in my memory bank, like my children's birth dates.

I do not remember the PLU for bananas.

But now it'll be ingrained in our memories.

Well, Dave, I want to kind of shift gears a little bit.

Talk about like what this has enabled for the rest of the store.

Like when you were at Schnooks, you were all about the smart store, everything being connected.

Is this, is this a technology that can work on its own?

Does it get plussed up once it gets coordinated with other solutions in the store?

Like how does it fit into that overall store operating system that I know you're a big fan of?

It's truly seamless.

Okay.

It was really simple to do from our perspective, our point of sale, people just had to give the item a UPC number so that when we scanned it it had a upc.

So from a store operations viewpoint they didn't notice the difference.

It does help the front end efficiency because even the checkers now again they don't need to look up that plu.

They just sit on the, on the scanner scale and go.

I think it, you know, it, it has done a lot to alleviate loss.

Okay.

With, with very little touch from a store team's viewpoint.

Dave, does it give the, does it give the self checkout attendant more confidence to go up to the person too if they are seeing that they're trying to scam bananas or, or does it just take it out of the equation completely?

Like how's it like when it's combined with Ever Seen.

So yeah, combined with ever seen it takes it out of the equation.

I will, I will add one thing that we're, we're working on with our self checkout vendor which is Fujitsu is to eliminate.

Well, let me back up.

You can still today take the Piccadilly salad container, hold it off to the side, enter 4011 or press the bananas button and then set it on the scanner scale.

And the scanner scale is not active at that point so it's not looking.

And now everything's going to see it and you get the intervention but now you're still back into the same situation with the attendant having to intervene.

What we're working with with Fujitsu and that is coming out shortly, I won't get to see it but I will, I'll be in the stores anyway is to wake up the scanner scale while the weight is settling and look across.

It's a side scanner that really is going to work.

Not the bottom scanner but the side scanner.

Look across and see if you see a digimark watermark.

If you do throw out what the customer put in and take what you read.

So that's, that solves that problem.

Again that contention point, it's you said on the scale doesn't matter if you did it before or after on, on the entry of the, the, the plue.

It's going to get wrong is what, what it is.

Got it.

All right, so Dave, so let's get down to the hard facts here then to the brass tacks of, you know, making this successful.

So I imagine, I imagine there is some hardcore ROI from this effort.

Like what are some of the things that you saw in your time at Schnooks?

So jury's still out but it is well.

So especially on the wing containers.

We're still rolling the wing containers Out.

We have them in our warehouse.

We're waiting for the stores to deplete their inventory and then roll the new containers out.

But from a Piccadilly viewpoint, I was expecting a uplift in sales.

Right.

Okay.

Now we're going to sell less bananas.

Yeah, we're going to sell less bananas.

Oh, right, right.

Think about that.

Yeah.

The, the reality is we're seeing less shrink in Piccadilly.

So we've seen a 40% reduction in the amount of shrink associated with their salad bars.

And the sales are, are, are, are.

I'm not going to say flat, but the, the sales are remaining constant.

Okay.

Shrink is going down.

Well, people now know they can't get away with it, so they stop trying.

And, and I think that's the big thing is, okay, not getting this huge lift in sales, but we are getting this huge gain in, in loss.

We're just not losing as much as much product.

So the ROI is there.

I mean, it far exceeded what we were expecting.

And it's tough to prove the negative because you really don't know what your loss is.

If you knew, you'd stop it.

Right?

Yeah.

So it definitely has helped prove that negative.

How long has the digimarc watermark been implemented at Chinooks at this point in time?

We started the rollout of Piccadilly, I think July or August of last year.

Hard for me to put my finger on it right off the top of my head.

But we were fully deployed by January, where all the containers had been replaced within the stores.

So we've gotten enough time to.

To get a real good view.

We can see the trend line, and the trend line on loss is downward.

It's definitely going down.

Got it, got it.

So roughly a year you've been doing work in this arena.

Okay, yeah.

Wing containers will be the fun one because there's a lot of.

Especially that black clamshell.

It's funny when you watch the videos from above and that black clamshell opens up because people mess up all the time.

You can actually see what's in there.

It's like, wait a minute, that's not even wings.

Right, so.

Well, Dave, I want to talk about.

You mentioned, you know, you kind of brokered the conversation between Piccadilly and digimark.

How are you working to get vendors on board with this?

Like.

Or how were you at Schnooks?

And how do you recommend that other retailers out there who are thinking about this kind of get those vendors on board?

I think the big thing is to focus on what you can control within the store and get some momentum internally within the organization.

Because the CPGs.

Working with the CPGs is tough.

Yeah, you can do it on your all of your own brands.

You can control that and then let the momentum gain on that and let other larger retailers help assist with getting the CPGs.

But you don't really have to work with the brands.

You work with your brand marketing team to, to do it for your internal products and then eventually we'll get there with the CPGs.

So there's enough benefit, you're saying just with internal products, the bakery, the, the bulk items, that kind of thing to see the return on investment here.

And then you kind of go, you let the big players, the Krogers, the Walmarts kind of work with the CPGs to kind of get them on board long term.

Right.

What would you say would be the reason that more retailers haven't gotten on board with this already?

I mean, obviously Schnooks is kind of a leader in the innovative grocery space.

But are there any things that you think are keeping them for other retailers or other grocers from moving forward with this?

Well, it's invisible.

I mean seriously can't see it is if you can't see it.

Yeah.

And that's, you know, talking with digimark, it's like how the heck do you market something you can't see?

And it is very difficult for folks to know about it.

I've talked about it at grocery shop and whatnot in the past and people are what the heck is digimark?

So they just, it's gaining visibility into what the product is.

That is the, the difficult thing.

So I think as more retailers start to do this and there are some very large retailers that are doing it for own brand, they have to remain anonymous.

Although one of them was outed on TikTok a while back.

So it is being done, it's being done within the government and in places that we don't know.

So again, it's an invisible technology.

It's really hard for people to become aware of it.

Well, and Dave, how much does it, does the like measurement of success come into play?

Like you talked about the reduction in shrink, not the increase in sales.

Like do you think that's playing a role here in, in maybe how retailers should be thinking about the advantages of deploying something like digimark?

I guess, I guess you will get an increase in sales.

Right.

So it's, it's both.

Depending on what product you're using, you're going to get the Increase in sales?

Because if you're putting two items together and you're scanning across.

Well, scanner scales are smart enough to read both of them, right?

Yeah, it'll see it.

So that's the sales there.

But then as people learn that they can't get away with this stuff, then they stop trying.

And that's the big thing.

Quit trying with us, go somewhere else and shrink is huge in the industry, so let's find ways to combat it there.

But I want to hit on the CPG side of this, too.

Like, are there use.

Are there use cases for, like, the CPG products that are just on the shelf day in and day out?

Like, if they started adapting invisible watermarks, is there a use case there that.

That Ann and I are not aware of that you've been thinking about contemplating?

And then.

Yeah, and then, of course, yeah.

What other.

What other use cases are out there that you're excited about potentially, Dave, if.

The CPGs would get on board, there'd be a huge amount of.

Of additional capabilities that could be realized.

Number one, they're going to get the sales on the front end.

Right?

It's going to improve the.

From a retailer perspective, it's going to improve their efficiency at the front end.

I don't need to sit here and look for where the barcode is on the item.

Pass it across the scale of the scanner.

Okay, so now let's play that out for the future a little bit.

Why even pass it across the scanner?

Why not have a dome going back to the old dome, things above, above the conveyor.

Right.

And looking down and just reading it.

So items move underneath, they get scanned automatically.

A lot of things there from us also, you know, I think, you know that I mess around with robots a little bit.

So if you, if you, if you have the SDK on the robot now and it can read it now, it knows with 100% certainty that that item is what that item is.

So the robots become even more efficient as well.

That's really interesting.

Yeah.

And so, and then back to the first point.

Like, the use case I'm thinking of is like always the yogurt.

Like when all the yogurts look the same, the cashier is ringing them up the register like that.

They are the same, but one's blueberry, one's chocolate, and they're just not bothering to scan them, they're just pushing them through.

You're just saying, like, you could just push those all through and be really efficient and get your inventory accuracy a lot better as a result of that as the retailer and as the cpg.

That's interesting.

So the robots.

Okay, what, is there anything else out there on the horizon that's, that's really cool to talk about?

Let's talk about gift cards.

Gift cards.

Okay.

I didn't know we're going to gift cards.

All right, major fraud point.

Yeah, yeah.

So it's a major fraud point.

And, and I've learned how that kind of works.

So you go in, you stuff a bunch of gift cards in your backpack, they bring them home.

Those blister packs can be opened by throwing them in the microwave.

Softens the glue, you drop the gift card out of the bottom, you peel off the scratch off, you write down the pertinent information.

And there are certain nation states that provide new scratch off stickers that you can put back over it, slide the card back in, seal the blister pack again, and nobody's the wiser.

You bring it back into the store and you stack them back on the shelf.

And these are state sponsored thieves that are out there that are doing this.

They probably know the movement of that, that gift card better than the retailer does.

And they'll know when that item is going to get sold.

And then people hang, especially around the holidays.

Right.

People are hanging on to, hanging on to it and then they don't activate it immediately.

But in the meantime, these nation states have grabbed the money and you're done.

So I know with Blackhawk, digimark is working to embed the watermark into that scratch off that it now is an integral part of the packaging.

So if that card comes out and it gets tampered in any way or the alignment changes in any way, watermark's not readable.

So now you're fighting gift card fraud and I think that is going to be just freaking awesome.

Yeah.

So then it locks it out at purchase when the actual ethical customer goes to buy it.

Is that what ends up happening, Dave?

Yeah, it won't scan because the watermark doesn't align with the packaging.

So they throw it out and get a different one off the shelf.

Yeah.

That's awesome.

Oh my gosh, look at you.

Nation states.

First time we've ever had nation state dropped in an omnitalk interview.

Dave.

Nice job, Nation state.

We know that's a huge issue.

I mean, we have friends who work in AP at lots of retailers.

And like you said, Dave, this gift card fraud, especially around the holidays, is a huge problem.

So it's really cool to see like how, how digimark is extending this beyond beyond the bulk container use cases and really starting to make an impact for retailers in other spaces too.

That's a great point.

And actually I want to ask Dave about this without giving up anything, you know, sensitive.

So you found success with the use case that we started this conversation with.

Conversation around, which is around like the salad bar order of magnitude.

What is the opportunity of the salad bar relative to gift card fraud?

Just for our own edification and knowledge.

I think that's up to individual retailers and how they treat this.

Right.

Because gift card fraud ultimately goes back to the provider of the cards and they're going to bear some of that in getting the money back for the customer and getting it to them is how does a retailer want to hand it?

Do they want to just hand them off to the provider and make them deal with that?

Or does the retailer say, okay, you know, you bought it in our store, we'll just, we're just going to eat it and we're going to refund your money for it.

So it's up to the individual stores.

But if you're eating a lot of that costs, which a lot of retailers do, there's a huge potential there.

Especially if you do have the nation state that goes after you.

And we've seen, you know, hundreds of thousands of dollars of gift card fraud at different retailers that never gets recovered.

So.

And particularly if you're doing your own branded gift cards too.

Right.

I got to think that's a.

Yeah.

Your own branded gift cards are.

They're not too interested in that.

They, they want the Nordstrom's, they want the Amazon cards in grocers, in groceries.

Yeah.

Yeah.

So like a Target or a Walmart as an example might be a little bit different, I would assume.

Yeah.

Wow, Dave, this was amazing.

Thank you so much.

So insightful.

I have two questions for you to conclude.

One, if people want to get in touch with you, they want to tap your years of experience with innovation in the grocery space.

Especially, what's the best way for them to get in touch with you?

Well, they can connect with me on LinkedIn.

Okay.

I did set up an LLC.

Now.

What'S the name of the LLC, dare we ask?

Well, it's Steck Consulting LLC.

It's very original.

Okay.

Okay, perfect.

But I think the best way to get me is through email.

It's Dave M as in Mark Steck.

S-t e c k mail dot com.

Excellent.

Okay, then if people want to connect with Digimarc, they want to learn more about invisible barcodes, the things they can't see but should know about.

What's the best way for them to contact the Digimarc team?

Go through their website digimarc.com and Digimark is with a C and not a K.

So go through there and you can schedule a meeting with them through their website.

Excellent.

Thanks, Dave.

All right.

Well Dave, it's great to see you again.

Always love getting to chat with you.

I mean, seriously, you are anani's go to on pretty much anything related to technology in a retail operation.

So thanks for taking the time to sit down with us today.

And as always, to everyone out there listening live, watching live, I should say, or listening later.

As always, be careful out there.