Luxury Retail Digital Product Passports: The Big Problem of Tiny Codes

The EU's Digital Product Passport is no longer a future problem for the luxury industry

In July 2026, the EU's Digital Product Passport (DPP) central registry goes live. By mid-2028, luxury textiles and apparel brands will need to comply. It’s a compliance and counterfeiting story in one, and the luxury industry is already moving on it. Every item will need a permanently attached, machine-readable identifier.

Ensuring compliance while minimizing impact on the customer experience is key.

Born out of the EU’s push for greater transparency, circularity, and sustainability, DPPs are verifiable, structured digital records that travel with a product, from factory to checkout, from resale to recycling.

DPPs store key data about an item’s origin, composition, manufacturing, and lifecycle. All accessible via a permanently attached carrier marked directly on the product itself, not the packaging.

Products will be added in a phased approach. For luxury textiles and apparel, compliance is expected to begin in mid 2028. Watches, jewelry, and sunglasses aren't mandated yet. But voluntary adoption is already rising.

Brands are getting ahead of rising counterfeiting, growing demand for transparency, and compliance deadlines they can see coming.

What identifiers do luxury brands use to comply with DPP requirements?

The EU regulation requires the DPP carrier to be permanently attached to the item itself, not the box, the certificate, or the packaging.

And it needs to remain accessible throughout the product's lifecycle: from store associates at the point of sale to customers at home to authorized partners such as repair centers and resellers.

That means the carrier must survive washing, wear, handling, and years of use. And remain readable by a mobile device or scanner at any point in the chain.

Depending on the product, this looks different.

For soft goods like textiles and leather, carriers can be sewn into garments or concealed within linings.

For rigid items with no space for a label or tag, the identifier must be engraved or etched directly into the material.

The most likely candidate is a 2D Data Matrix code.

Data Matrix Codes:

Everything you need to know

Read more

It requires precision engineering on a tiny scale. And as it's part of the object itself, it makes them difficult to fake. You can’t peel off, reprint, or transplant a laser-etched code.

While this helps the industry comply and combat counterfeiting, it presents a new challenge for luxury retailers.

Why are small luxury items a unique challenge for Digital Product Passport compliance?

If you spend thousands of dollars on a special watch or jewelry, you don’t want a visible 2D code. It’s got to be tiny and in a place that’s not easily seen.

The only viable, permanent, machine-readable identifier is a laser-engraved or etched 2D data matrix code directly into the metal, typically 2 to 3 millimeters wide.

And this isn’t a niche edge case. It covers some of the highest-value, most counterfeited, and most difficult-to-trace items in any luxury house's range: rings, bracelets, watches, and bags.

The same properties that make engraved codes so permanent and tamper-proof also make them exceptionally difficult to scan.

Why are small 2D engraved codes hard to scan?

Traditional scanning hardware is insufficient for capturing direct part marking (DPM) codes. Several compounding factors make reading tiny, 2-3mm engraved 2D codes uniquely challenging:

• Low contrast: A printed label has contrast that scanning software can easily detect. Engraving or etching has much lower contrast. Relying on texture, shadow, and reflectivity, which most scanners fail to detect.
• Finder pattern: 2D codes rely on finder patterns (the three corner squares in QR code or the solid L-shape in a Data Matrix) to locate and orient the code before decoding begins. If these are partially obscured by reflections or wear, the decoder can't establish its coordinate system.
• Curved surfaces: A 2D code must be captured as a whole, multi-dimensional grid image. A ring or bracelet curves across multiple planes, warping the code's pixels and degrading scanning performance.
• Tiny module size: Data matrix codes employ something called the Reed-Solomon error correction method. This technique adds complementary data patterns during symbol creation so codes remain scannable even if up to 30% of the code area is damaged. But that ceiling depends on the error correction level chosen at encoding, and small codes are often encoded at lower levels to fit more data into fewer modules. A tiny 2mm data matrix code has very few pixels per module. It might only be 10x10 instead of a regular 16x16 grid, so the margin for error is almost nonexistent.

Why is Scandit the right scanning solution for engraved luxury DPP codes?

Scandit's AI-powered scanning engine is built to handle direct part marking (DPM) codes, the category that includes laser-engraved codes on metal.

For Data Matrix codes, our capture software:

• Speeds up the localization and decoding of 2D codes, including square and rectangular symbols, and large symbols with perspective and non-linear distortions.
• Enables color inversion within the settings to increase contrast for optimized scanning.
• Recognizes GS1 codes instantly and uses a parser API to translate the data inside them into a format that systems can actually use.
• Requires no specialist hardware. Scandit works on the devices that luxury retailers and shoppers already use, through SDK integration with existing associate and consumer applications.

The result: first-time scan rates that protect the brand experience at every touchpoint, from the shop floor to the secondhand market.

When does scanning 2D codes actually matter?

Scanning tiny 2D codes quickly and accurately is important throughout each item's lifecycle, from manufacturing to end-of-life recycling. Here are some key retail scenarios.

Inventory receiving

The chain of custody starts the moment a product enters the receiving bay. Every item entering the store must be logged against its DPP record, confirming it's genuine, accounted for, and tied to the correct batch. A backroom process with no customer present, but a scan failure here can slow things down and lead to stock inaccuracies.

Ownership transfer at the point of sale

A client advisor standing with a customer who has just decided to buy something expensive does not want to be wrestling with a scanner. The customer is at an excited emotional peak, and the advisor should reinforce that feeling rather than apologize for a device that won't read a code.

Customer apps

The relationship between a luxury brand and its customer doesn't end at the point of sale. Consumer apps let shoppers scan items at home to access care instructions, provenance stories, and product documentation. A brand touchpoint with no associate present to smooth over a failed scan.

Repairs and resale

When a watch goes in for repair, or a bag comes back through an authorized reseller, someone in the store needs to scan the code, confirm the item against its DPP record, and update the chain of custody. If the scan fails here, the item's history gets stuck in limbo, with nobody able to confirm what it actually is.

The secondhand luxury goods market reached an estimated €48 billion in 2024. Watches and jewelry alone account for 80-85% of total sales in that market. These are high-value items where authenticity is the whole point. And scanning has to work.

Returns authentication

Returns fraud is the sharpest commercial argument, with luxury disproportionately exposed. Counterfeit swaps in original boxes are a known and growing tactic.

In a 2025 NRF report, retailers reported that 9% of all returns were fraudulent and that decoy returns had increased by 64%. A reliable scan at the returns desk is becoming more important than ever, and one that has a direct impact on the P&L.

The benefits of 2D codes, especially Data Matrix, are clear. But luxury retailers need their associates and consumers to scan them seamlessly, whether at the point of sale or decades later in a resale shop.

A luxury house doesn't cut corners on materials, construction, or finish. The technology reading its products shouldn't either. Scanning a code that fits on a ring, on the first try, whether it's day one or year twenty, is its own kind of craftsmanship.

It’s what Scandit does best.