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 all one. Every item will need a permanently attached, machine-readable identifier.

For most of what a luxury house sells, the answer is already solved. For its most valuable pieces, it is not.

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 QR code, an NFC chip, or an RFID tag permanently attached to the product, not the packaging.

Products will be added in a phased approach. For luxury textiles and apparel, compliance is expected to begin in mid 2028. Harder accessories, such as watches, jewelry, and sunglasses, are yet to be mandated, but voluntary adoption is growing due to the rise of counterfeiting.

DPPs are seen as a way to combat counterfeiting

How big is the counterfeit luxury goods problem?

In a 2025 report from the Organization for Economic Co-operation and Development (OECD), trade in counterfeit goods reached $467 billion, representing 2.3% of total global trade.

Watches alone account for 23% of the total seized value globally.

Pricing pressure is largely to blame. Rising inflation, lower discretionary funds, and tariffs go some way toward explaining why half of 15-24-year-olds in the EU said that if the price of a product was too high, it would be okay to purchase a counterfeit version.

It’s this rise that is prompting luxury retailers to take action and voluntarily add DPPs to goods.

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

The EU regulation requires the DPP to be permanently attached to the item.

For textiles and leather goods, RFID is the clear choice. Tags can be sewn into garments and concealed in linings.

It’s a durable, scalable, and easy way for workers and customers to access product passports with scanners or mobile devices using NFC technology.

The other option is to use a 2D code, such as a QR code or a Data Matrix code, as the interface to access the information. But consumers frequently cut out labels, and printed codes can fade in the wash.

Where there isn’t space for a label, or things can’t be attached, codes have to be engraved. And this presents a new challenge altogether.

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

The DPP regulation requires the identifier to be permanently attached to the item itself, not the box, the certificate, or the packaging, leaving only one choice.

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, and watches.

Why are small 2D engraved codes hard to read?

Understanding why the scan fails is the first step toward realizing that standard scanning infrastructure won't be enough.

There are multiple factors that make scanning small, 2-3mm, engraved 2D codes difficult:

• Low contrast: A printed label has color 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 squares in QR code corners 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, enabling the reconstruction of corrupted data. Data Matrix codes remain scannable through this mechanism even if up to 30% of the code area is damaged. A tiny 2mm data matrix code has very few pixels per module. It might only be 8x8 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 Data Matrix 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 clienteling or POS applications.

When a client advisor scans a ring at the point of sale, that scan either works or it doesn't. There is no acceptable failure rate for a $10,000 item.

When does scanning 2D codes actually matter?

Scanning tiny 2D codes quickly and accurately is important in 4 distinct scenarios with commercial implications.

B2C

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In-store customer experience

This is a brand experience play. When a client advisor is talking to a customer about an item and scans to access provenance, sustainability, and craftsmanship details, failed scans can ruin the experience and lose the sale.

Ownership transfer at the point of sale

Similarly, 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.

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 question for luxury brands is not how to apply DPPs to small items. That decision has been made for them. The question is whether their scanning infrastructure can read what they've engraved, reliably, first time, on the shop floor.

For Data Matrix codes on metal, Scandit's capabilities are the answer that standard scanners cannot provide.