RALPHS SETTING SIGHTS ON CHAINWIDE EAS

CHRIS O'LEARY

COMPTON, Calif. -- Ralphs Grocery Co. here is moving toward a chainwide rollout of electronic article surveillance and plans to install 100 more stores with the security system in the next two months.

The EAS rollout to Ralphs and recently acquired Food 4 Less stores will bring the total number of EAS-equipped stores to 227, and Ralphs expects to go chainwide, said Al Gray, senior vice president of administration.

Ralphs' chainwide rollout would represent one of the first complete installations of EAS technology for a large, multibillion-dollar supermarket retailer, an industry source said.

Ralphs also plans to demand source-tagging from manufacturers of theft-prone merchandise once the great majority of its stores are equipped with EAS, Gray said.

"If we get into a complete rollout for most of our chain we will demand from our manufacturers, particularly of [theft-prone] merchandise, that their items be source-tagged," he said.

Source-tagging has yet to gain a foothold in the supermarket industry, with only a small number of manufacturers conducting limited tests. But industry analysts predict the situation may change when large retailers complete chainwide EAS rollouts.

Ralphs applies EAS security tags to about 1,000 stockkeeping-units, primarily high-margin nonfood items such as film, batteries, videotapes and health and beauty care merchandise. Ralphs has an average of 25,000 SKUs per store, Gray added.

Gray said the retailer is negotiating on source-tagging with a number of manufacturers, including Eastman Kodak Co., Rochester, N.Y.; Fuji Photo Film USA, Elmsford, N.Y., and Bayer Co., Pittsburgh. "There's a long list that is growing," he added.

Tagging items at the point of

manufacture increases costs for vendors, Gray acknowledged, but vendors should be rewarded with increased sales from more open merchandising. The cost of source-tagging has been estimated at up to 5 cents per item.

"By source-tagging [an item like] Kodak film, their product can be merchandised any place, in any store -- in dump bins, for example," he said. At Ralphs, such merchandise is kept either behind locked counters or in a heavily monitored display near the front end.

Source-tagging should improve the performance of EAS systems, Gray said, adding that labels affixed at the store level, while effective, have some drawbacks.

Among them is the large amount of labor required to affix tags to theft-prone merchandise, which requires monitoring of employees to ensure tagging is performed correctly. "It is labor-intensive but it's well worth it," Gray said.

There are also questions on the ultimate effectiveness of store-applied EAS tags. "The professional thief is aware of [EAS tags] and can peel them off," he said. "And when you apply a tag to small items, you cover up a lot of consumer information like dosages or ingredients."

By contrast, even partial source-tagging serves as a more effective deterrent to theft. "If you have a dozen packages of film, you couldn't tell me which six are source-tagged. It would be impossible," Gray said.

Ralphs' EAS system is provided by Checkpoint Systems, Thorofare, N.J.