TAG TRAPPINGS

MINA WILLIAMS

Grocery's lag in rolling out electronic article surveillance (EAS) should not be construed as apathy.

Although EAS is touted in the industry as a movement to deter shrink in frequently targeted categories within the food channel, analysts have noted that penetration of security tags into the marketplace has reached only 20%. This is in comparison to other classes of trade, some having embraced EAS up to 70% penetration. Less than half of supermarket operators use EAS technology, according to this year's Supermarket Shrink Survey, conducted by the National Supermarket Research Group, Scottsdale, Ariz.

Still, supermarkets are not sitting back.

"I want to prevent theft of high-priced meats," said Jack Gridley, meat and seafood director, Dorothy Lane Market, Dayton, Ohio. Over the past few months, Dorothy Lane has become a shoplifting target partly due, it is believed, to the retailer's high-end image and quality items. Attentive front-end personnel have helped stem some of the losses. But it isn't good enough. Dorothy Lane hopes to increase its security technology through upgrades.

There are concerns, however. "We haven't wanted to insult our good customers and we have not been pleased with the false alarm rate," said Gridley. "But the upgrades may bring us payoffs."

A number of categories are primary targets for shoplifting. Health and beauty care leads all others by a wide margin; HBC items were reported in 35% of known shoplifting instances, according to the Shrink Survey. Cigarettes, which fell from No. 1 on the list, were reported in 19% of cases. Observers attributed the lower incidences of loss to supermarkets having shifted tobacco sales to the courtesy counter. Meat accounted for 18% of reported incidents. Beer and wine, an "up-and-coming" target, was reported at 15%.

"A $40,000 to $50,000 meat department can lose up to 2% to theft," said Bob Schueler, product line specialist, Hobart, Troy, Ohio. "EAS discourages theft."

Infant care, film, batteries and vitamins/minerals/supplements are categories industry observers say could be primary testing grounds for manufacturer-affixed EAS tags because of their high interest by recreational and professional shoplifters.

While shoplifting accounts for 22% of shrink, employee theft, at 55%, is even more pervasive, the study found. Given these figures an average store with $18.3 million in sales can expect shoplifting to cost almost $92,000 in lost profit, according to the study.

Shrink, therefore, has become a barrier to optimal bottom line contribution. The solution may very well be EAS technology. Those food retailers using EAS technology report 10% less overall store shrink than those who do not but retailers question at what point in the logistics cycle, and by whom, tags should be affixed.

The Shrink Study confirms that EAS can cut losses. Companies with an EAS system reported overall shrink at 1.99%, while those without EAS reported shrink at 2.47%. Companies employing EAS also reported a 4% lower shoplifting incidence than companies without it.

But these savings can only be captured with systems in place, with tag transmitters positioned on products and receivers at the front door. The cost of investing in EAS systems depends upon the number of checkstands and activations. One source put the average cost per unit between $15,000 to $25,000.

As supermarket loss prevention specialists look to boost the effectiveness of their EAS systems by increasing the number of tags in position on the shelves, labor management specialists cringe at the time and training it takes to affix the item-specific tags.

This clash is causing more and more retailers to partner with manufacturers to ensure that the tags are affixed to products or in some cases imbedded in labels or placed inside the contents of the package.

Fred Meyer, Portland, Ore. has stepped up its efforts to source tag high-ticket vitamins, minerals and supplements in its private-label line. Vendor-positioned source tags are expressly affixed on the bottles to not cover the label. The entire package is shrink wrapped to secure the tag's position and resist tag tampering.

These vendor-affixed tags are visible on items in several departments of the units visited by SN. Health and beauty items, power tools, toasters all sport EAS tags. Industry insiders estimate that Fred Meyer partners with more than 200 manufacturers to tag more than 3,800 items.

Winn-Dixie, Jacksonville, Fla., is another operator reportedly deepening its partnership with vendors as it steps up its EAS solutions.

Technology is also allowing for tags to be positioned behind pricing labels, embedded on readable labels, placed underneath prime labels or inserted inside the package to further contribute to the aesthetics.

"The labor component is too high at retail," said Don Taylor, director of marketing, Sensormatic, Boca Raton, Fla. "If a manufacturer can mass tag tens of thousands of items at one time that would be the most cost-effective method. At the store level it is a manual process. At the manufacturer the process can be more automated because of the scale."

But the big brands say without an industry-standard technology, source tagging is too costly an option to consider. With two major technologies on the market today, manufacturers would have to invest in both types of systems to accommodate retail customers using one technology or the other.

"Shrink is a growing issue every year," said Richard Draeger, vice president, Draeger's, an upscale Menlo Park, Calif., independent. "It's too bad manufacturers don't get together, like what was done for UPC, and source tag items. Retailers could afford to pass along the savings to customers and even help absorb some of the manufacturer's costs because shrink would be reduced that much." Despite the objections, EAS remains in the sights of operators striving to limit shrink to its barest bones. One tag provider reports a 65% increase in label demand over last year, estimating that over 1.6 billion products on retailer's shelves are currently tagged.

Industry sources estimate that tags cost between 3 and 5 cents each. Retailers point out that when acousto-magnetic tags are affixed or inserted at the manufacturer level an additional atheistic solution can be found.

"Manufacturers are more cautious where the tag is positioned on their product than any of my aisle workers," said a Western operator. "Manufacturers are careful not to cover ingredients or product information. They make sure the tag is secure on the item. It makes for a better shelf presentation."

Retailers realize the boon of hiding the tag. Andronico's, Albany, Calif., has recently tagged high-end wines, spirits and champagnes. The operator uses a store-level affixed bottle cap, which is removed at the front end and reused to safeguard its more pricey products. At the chain's showcase Danville unit, the department manager was reluctant to use the system because of aesthetics. However, to maintain customer accessibility to these products and reduce shrink, he relinquished to the bottle-capping system.

This awareness in the retail community has spurred some wineries to examine source tagging, positioning the tag under the bottle's label, said a Northern California source. High-ticket gourmet food vendors are also exploring tagging programs with retailers.

Internationally, supermarkets are using EAS technology and partnering with their manufacturer suppliers to affix source tags. Asian giant Dairy Farm International, South Africa's Shoprite Checkers and Danish food retailer FDB each have vendors source tagging items.

Recently Budgens, the 200-unit U.K. food chain, began source tagging its high-ticket wine, spirits and meat. "We feel that source tagging is a major advance in retail security and is the way forward for all retailers in today's market," said Peter Ellis, operations director.

In the United States, meat and other random-weight perishable items are posing a technology challenge. Moisture-resistant tags embedded in the "diaper" of the meat tray are offering some relief from the shoplifting of high-ticket meat items.

Retailers, including Kroger and HEB, are exploring other technologies to tag store-level-produced random-weight items. What is being offered up is a tag with increased sensitivity and better transmitting capabilities, marrying EAS with a readable label. This gives unit-level operations the flexibility to selectively apply tags to packages based upon the item, price or total value of the package. Scanning deactivates this coil-based technology tag.

"Distribution centers use EAS, but not all the stores they supply do," said one industry observer. "They have live tags coming in and the shipments have to be split between stores that use EAS and stores that don't use EAS."

The Budgens system relies on the acousto-magnetic tag's ability to be activated and deactivated throughout the logistics cycle. Manufacturers install inactive tags, which are then activated at the distribution center if the items are earmarked to be sent to units with EAS systems.

The chain also ties its EAS efforts to closed-circuit television initiatives. Door alarms trigger the cameras to roll, recording the event.

"Source tagging is a process that retailers have to have for EAS to be successful," said Don Taylor, director of marketing, Sensormatic, Boca Raton, Fla.

"It has been shown that EAS works. It has been proven that it can contribute to profitabilit," he stated.