THE INTERVIEW - TAG Company (UK) Limited
TAG Company Ltd is the UK's leading independent provider of Electronic Article Surveillance (EAS) solutions for retail. Based in Harmondsworth, West London, TAG is a privately owned designer, manufacturer and integrator of anti-shoplifting solutions, ranging from tiny Radio Frequency (RF) paper labels and Acoustic-Magnetic (AM) tags to alarm systems with a full suite of integrated Management Information tools to monitor alarm activity and pinpoint specific areas for focus. TAG has installed over 20,000 tagging systems in the UK and protected over 1 billion items of merchandise in the past four years. In 2007 alone the company will secure more than 500 million consumer products offered by retailers including Morrison's, ASDA, Woolworths, HMV and Virgin Megastore. In addition, around 500 UK independent retail sites now benefit from TAG's solutions. Phil Doyle, Managing Director of TAG Company Ltd, spoke to The Grocery Trader.
The Grocery Trader-First of all, when was TAG founded?
The business which was to become TAG started in 1996 as part of Entertainment UK (EUK), which distributes entertainment media to major retailers in the UK. The team devised a security solution which closes and protects in a single action, the Self Seal Tag™, which is still today the leading disposable security solution for DVD and CD in the market. The ambitions of the team to add to this solution and become a Global Service Provider led to the business being sold to the management team in 2003. TAG has now been supporting retail to improve their profitability for ten years.
GT-Do you manufacture any devices here?
To ensure the right mix of price, quality and availability, our products are manufactured globally-from Germany and Switzerland, to China and Singapore. Our Self Seal Tag™ portfolio is manufactured in the UK, and we have an operation which designs and manufactures our new Series 58 Acoustic Magnetic tags in the US.
GT-What is the difference between Acoustic Magnetic and Radio Frequency?
At a very basic level, an AM tag contains a resonator, which sets off an alarm-you'll recognise this solution as the white plastic labels used by retailers such as Boots, ASDA, HMV and Virgin. An RF tag is an adhesive paper label with a printed circuit on the back-as seen in Woolworths, Sainsburys, Superdrug and Staples, amongst others. The market has traditionally been split pretty much equally, and usage of AM or RF depends very much upon the type of merchandise to be protected, the style of system to be used and the retail environment-including the layout of a store and whether the retailer requires single-swipe scan deactivation (this is where we provide an integrated solution to cut checkout operational cost in half by scanning barcodes and deactivating security labels.) The truth is that both technologies have their benefits, and whereas in the past a retailer had to work with one of the two major players based on their choice of technology, companies like TAG now offer a completely independent choice; rather than starting with a particular technology and forcing it to fit and work, we now start with the retailer's criteria and requirements, and the actual choice of technology is often the last decision.
GT-When would you use either one?
There are many reasons why you would choose one over the other. These range from essential considerations, such as the merchandise to be protected, to the size and shape of the store and its entrance. There is a mix of technical, aesthetic and performance characteristics for each solution which need to be considered, and both have their merits.
GT-What distinguishes the UK from other marketplaces?
The UK is pretty mature in Electronic Article Surveillance (EAS) terms compared to other countries. Unlike other markets, there is no longer a monopoly or even duopoly, with alternative high quality Service Providers such as TAG emerging to provide superior customer service. In addition, major retailers often like having more than one supplier or partner, for the interaction they get and service levels, which works in our favour in this country-many would say 'it keeps us honest.'
GT-What does the name TAG mean?
The name simply means what it says-'TAG.' Our strap line is 'Keep. Track': we tag product to help keep it where it should be, and track it if and when it moves illicitly.
GT-How big is TAG?
Our global turnover is over £10m, with a large proportion generated in the UK and mainland Europe. This will grow significantly with our new teams in the US and the Far East, the launch of our Series 58 AM Security Label™ and our ongoing investment into global Source Tagging solutions. We're the leading 'pureplay' security tagging service provider in the UK, and plan to gain that position internationally.
GT-How many countries do you trade in?
We trade in nearly 50 countries, direct or through agents. We have 25 staff here in the UK, where we cover Europe, Middle East and Africa (EMEA). Our US HQ is Fort Lauderdale: our Asia-Pacific HQ is in Singapore.
GT-How fast is TAG growing?
We doubled our revenue last year, and expect further growth in 2007, with major expansion over the next three years.
GT-What value of goods are 'lost' annually?
The UK economy lost around £2bn in 2005 from shoplifting and staff theft. Average value per reported incident was £150. For major retailers this constitutes a huge loss of profit; for smaller retailers this can represent the difference between ongoing, profitable business and closure.
GT-How fast are these losses growing?
The £2bn annual figure is fairly consistent. The Centre for Retail Research's 'European Theft Barometer' calculates "shrinkage" as a percentage of national retail turnover, with the UK running at 1.5%.
GT-How does the rest of Europe compare?
Reports show that the UK has got the EU's highest shrinkage, but this may be because retailers tend to report loss more accurately-shoplifting is sometimes considered part of social make-up in other countries. I'm sure that recent changes in attitude to shoplifting and any subsequent 'punishment' will prove to have an impact on what is reported and what is not in the UK.
GT-How big is the UK market for EAS?
The industry which we are part of-Retail Security-covers more than EAS, and includes CCTV, access control and fire. Current estimates value total retail security spend at £720 million, with EAS contributing anything up to around half, of which hardware represents up to 50% and consumables-tags and labels-and service make up 25% each. However, an increasing number of High Street retailers are recognising the benefits of EAS, and the number of stores using EAS has increased rapidly in the past 12 months.
GT-What is the level of investment in new systems?
Every year several major UK retailers renew their systems. Last year we installed around 75% of all new retail systems, including over 7,000 new systems at the entrances to Woolworths' 821 stores. We have also recently agreed with Morrisons to implement an EAS programme in 60 outlets after short-term trials showed rapid payback.
GT-Tell us about your EAS equipment.
It starts with soft tags physically attached to merchandise. Our RF paper labels vary from 3cm x 3cm to 5cm x 5cm, square, round or triangular, in a plain, barcoded or a fully customised format. Bigger labels give better detection, but from a marketing perspective they hide more product surface. In acoustic-magnetic (AM) labels, the only available form factor is the rectangular white tags aka 'Chicklets.' Each technology then has its own deactivators (to 'kill' labels), detachers (to take hard tags off product when it is sold) and alarming gates at the entrance to a store. We can then overlay Management Information sensors to count and report alarm activity, count customers and even report back on temperature and humidity in stores.
GT-What's the price difference?
It is dependent on the exact solution, however typically an AM hardware system is slightly more expensive than an RF one, but then the way in which it is used and set up can prove more beneficial to some retailers. Importantly, the consumables side of the solution can prove significantly different; prior to any customisation, conversion into hang-tags, sew-in tags or waterproof labels for meat and fresh product, the basic AM element can start at around 3p versus 1.5p for an RF one. Of course, many retailers use huge volumes of labels, which can reduce this figure, and some require specialist design, which adds to the base price. It's important to note, though, that each technology has other 'bigger picture' benefits, which can prove to be more or less effective than the other. So simply going for the 'cheapest' solution isn't always the right long-term solution.
GT-What about hard tags?
Hard tags can be any shape, size or colour, in either RF or AM. They're a far more visible deterrent. Garment tags-shell or designer versions-are highly conspicuous, and can damage clothing if removed illegally. Hard tags' downside is the higher operational cost, anywhere between 20p-£2 per unit, and the time needed, typically, for application in store. Removing hard tags is a separate activity to EPOS scanning, whereas soft tags can be deactivated simultaneously. Our other hard tags include bottle tags, among them our new 'benefit denial' versions which make it very difficult to open the bottle or re-sell after theft. We also offer 'spider' wraps with built-in alarms for games and high value packaged goods. Given the price of these solutions, it's very important to use the right hard tags with the right merchandise.
GT-What are your latest launches?
Our latest launch is our Series 58 AM Security Label™ Introduced four months ago and featuring our own technology and manufactured by us, they target a global market approaching 10 billion units annually. We're the only independent provider to have a reliable and customisable portfolio of both AM and RF solutions.
GT-What does this mean for retailers?
It means a choice of tagging technologies with similarly high performance from one vendor. We can produce labels with retailers' logos and colours and add consumer messages; convert them to alarming swing tickets; and provide them globally to retailers' suppliers on behalf of buyers and merchandisers for Source Tagging.
GT-How do these devices work together in a tagging solution?
At their simplest, typical EAS solutions involve tags, a means of removal/ deactivation and an alarmed exit. Smart tagging takes the basic EAS platform, and adds monitoring, data capture and analysis and helps the retailer to ensure proper use and therefore payback in line with their projections. This might include analysis of how staff members react to alarms, or frequency of events across an estate, in a region or even drilling down to specific entrances in-store.
GT-What products are your solutions used on?
They're suitable for everything from entertainment to fresh produce-packaged items, clothing and homeware. We've yet to find something we can't tag.
GT-How many items are tagged in the UK?
Figures are inexact, because there are no hard and fast rules and retailers' tagging policy varies: if an outlet sells 250,000 items, you can't tell how many are tagged because many are done so very discretely! Another factor clouding the figures is increasing Source Tagging-half the tags on items sold here are applied at point of manufacture, in distribution centres or at final assembly. Even staff are sometimes unaware of what is tagged-in this way EAS can also help internal theft from store.
GT-When do retailers opt for Source Tagging?
Again, it varies. Some want tagging in store, for control: others prefer to defer the cost to their supplier, packager or distribution centre. The benefits of Source Tagging are that store personnel can focus upon their core competence rather than becoming a costly tagging resource, and also that suppliers and retailers know that tags are applied at point of packaging or manufacture, which makes them very difficult for thieves to get to in-store and requires full deactivation-thus ensuring universal application and making the solution more difficult to defeat.
GT-What proportion of items are Source Tagged?
As an estimate 50% of goods are Source Tagged, rising to a predicted 70% in 2009. A number of large retailers are now driving the cost out of stores and on to suppliers and are seeing significant cost benefit, as well as the obvious loss prevention benefits. Often, the cost of Source Tagging is negotiated into the final cost of a product from a supplier.
GT-How do EAS systems interface with retail IT applications like EPOS?
They are starting to integrate more than ever before, but to date EAS has been seen as pretty much a standalone system used for deterring shoplifting. Many retailers want to connect EAS, CCTV and single scan deactivation of security labels at EPOS, and we are now providing this. The additional data we collect and collate-customers in store, alarms and deactivation-can then be used in conjunction with EPOS outputs to look at spend per customer, theft per hundred customers and so on. TAG is also developing a specialist solution using RFID and EAS which can be linked to stock control and EPOS data to ensure shelves are fully stocked, incorporating proactive theft alerts and then linked into EPOS applications. Interestingly, there is a misconception that RF EAS is RFID-this is simply not the case. Right now, both technologies are being developed with different goals in mind. At some point in time, they are bound to converge, but this is still years away.
GT-How does EAS fit into a store's loss prevention set-up alongside other precautions?
EAS is generally used as a stand-alone technology, but there is connectivity with other elements such as CCTV, where we can direct a camera to an entrance in the event of an alarm. Man guarding plays its part as well, with the correct reaction to alarms being essential when dealing with customers-too soft and EAS is useless, too hard and customers shop elsewhere.
GT-How do you sell your solutions to retailers?
Traditionally TAG has sold directly, but in the last two years we've launched dealer programmes and have 20 dealer partners selling various loss prevention solutions, ranging from our Series 58 and Series 8.2 labels through to our RF hardware.
GT-Are your devices and solutions accredited to recognised standards?
All our products are CE approved, have the BS kite mark, and our factories have ISO9002 accreditation. From 1 January EAS hardware must comply with the WEE directive, and we also adhere to the RoHS directive which limits the level of hazardous waste in the market.
GT-What size stores are your retail tagging solutions aimed at?
They're aimed at everyone from independent retailers to 200,000 square foot superstores. Any retailer experiencing over 1.5-2% shrinkage should seriously consider EAS, but we also support a number of customers who want to control their loss levels, which sit at around 0.5%.
GT-How many different items can one EAS solution protect?
To give you an example, with Woolworths we're tagging 5,500 SKUs and working with over 500 suppliers worldwide to manage their Source Tagging programme. There's no limit to how many lines you can protect.
GT-What's the typical cost of an EAS solution?
With small stores, it could be just £3,000: for a supermarket the hardware could be £30,000. Because every solution is fully customised and because of the huge range of solutions we can provide, the cost varies massively.
GT-What difference do your tagging solutions make at store level?
Retailers we work with have reported up to 75% improvement in operational effectiveness; 23% increase in profitability; and 50% reduction in shrinkage. Again, these numbers vary depending upon the exact solution, but those we support report an extremely positive impact on their business.
GT-What is the impact on Retail Operations, Sales and Marketing?
Using EAS and converting to 'live merchandising' can help reduce queues, and eliminate dummy packs and separate bars for collecting merchandise. Shoppers can then go to any POS location and pay, increasing sales. HMV, ASDA, Woolworths and Virgin already use EAS in this way. We can also now incorporate marketing panels into the alarm systems at the entrance to a store, which means improved branding, and, potentially, improved revenue from advertisers. When it comes to Retail Operations, the actual operational cost of human activity can be dramatically reduced with the right EAS programme.
GT-Can EAS help retailers gain market share?
Yes, EAS helps build retailer share by improving on-shelf availability, driving sales and profitability. Customers also want to see live merchandising and be able to touch the products they are about to buy. Those that embrace this desire have a natural benefit.
GT-Your literature talks about "The Ten Steps to a Successful EAS Programme." Can you take us through those?
-One: Get the technology right for the business being protected.
-Two: Co-operate-develop long term relationships with your EAS supplier, and include those involved in merchandising, buying, operations and marketing.
-Three: Develop an EAS strategy, don't just tag everything. We develop a matrix with retailers covering risk level, type of merchandise and value of product. In supermarkets, 50-70% of items could be tagged rather than everything, which can have the same impact in terms of loss prevention, but can cost significantly less to implement.
-Four: Training-by far the most important factor.
-Five: Branding-will your EAS stand out and be obvious, or form part of the store environment?
-Six: Achieve maximum co-ordination over the programme by aligning the property department and shop fitters with the EAS Service Provider-before, during and after installation.
-Seven: Reliability-EAS is one of the most reliable technologies used in retail now after years of development and improvement. 'Out Of Box' failure rate is normally far less than 0.5% and many retailers go several years without a service callout. Choose a Service Provider with the technology that will reflect this.
-Eight: Awareness-make sure staff and shoppers know how to respond if an alarm sounds.
-Nine: Motivation-we work with retailers to motivate staff to use EAS correctly, with league tables and awards for top stores.
-Ten: Integration-if you have any security measures that can be used in parallel with EAS, do integrate them into a coherent programme.
GT-What do you mean: "most callouts are due to human interaction"?
Of the service calls TAG receives, a vast amount are due to incorrect use of the system, for example; staff finding a way to unplug them at the mains, or even simple false alarming because personnel have tagged too close to an entrance (TAG advises a 'no tag zone' to keep tagged merchandise away from entrances and minimise false alarms.) There is also a phenomenon during Christmas trading where stores drape Christmas lights around the alarm systems, and this can make them far less effective.
GT-How do you go about devising tagging solutions for specific clients?
We examine the store environment, assess the merchandise mix and set a tagging strategy then produce a recommendation, which could take one day for a single store, or a number of weeks for a chain-wide programme. We then look to prove the concept with a trial or small-scale rollout.
GT-Who in a retailer needs to be involved in designing the EAS solution?
There are multiple stakeholders, including Loss Prevention, Operations, Property, Procurement and Merchandise Buyers, as they know best what's at risk and the impact on their categories and overall business.
GT-How much expertise do retailers need, to get the best from EAS?
EAS is as simple as a till to operate; with the support of a reputable Service Provider such as TAG, retailers don't need to become experts and can focus on their own core business.
GT-Do you provide training for retailer staff?
As appropriate, we insist on anything from one hour as part of the handover, plus written guidelines, to ongoing training using the retailer's intranet and other internal communications to store staff.
GT-What about other support?
TAG has a service hotline during retail trading hours, and can provide wider coverage if required. We can also provide remote monitoring and set alarm thresholds for intervention, using exception reporting.
GT-How long does it take for solutions to go "live"?
Although it varies depending upon store size, we can implement anywhere from a matter of hours up to 2 days.
GT-How long before customers see a return on investment?
The fastest can be under three months, or up to one year for a larger superstore. It used to be five to seven years!
GT-Which retailers are your clients? Do you publish case studies?
Yes, we do-see examples on our website, www.tagcompany.com.
GT-What are the signs that a store has one of your solutions in place?
You'll see nothing, if the retailer prefers discretion. Otherwise, they make it obvious with tagged products, doorway alarms and signage. Both have their advantages and can be achieved with careful planning.
GT-How easy is it to update EAS solutions when stores are redeveloped?
It's very easy-the infrastructure normally stays the same. When store fronts are redeveloped, we work with store fitters to ensure everything goes smoothly.
GT-Do you offer health checks for retailers concerned about their systems' continuing suitability?
We can provide health checks and assessments, and retrain staff. Where possible we extend the life of existing EAS solutions. EAS systems generally have a 5-7 year lifespan, hence my comment about payback times improving. Where necessary, we will swap out or upgrade the solution.
GT-What external factors are likely to impact on UK retailers' demand for EAS systems?
The technology is reliable, however retailers are constantly refreshing it in response to pressure on performance. Regardless of the economy, there's a continuing need for EAS-in short, the environment won't change much.
GT-Finally, where do you see TAG going from here?
We're developing and expanding in North America, the single biggest EAS market. In Asia/Pacific we're working with many suppliers on Source Tagging and with retailers going into China. In the UK we'll build on our established business, constantly improve our service to retail and hopefully convert more retailers. Elsewhere in EMEA we're moving into Europe and working with agents in the Middle East and Africa. There are some emerging European markets where they haven't had EAS, or it hasn't been a cultural norm. In two to three years, we expect TAG to be one of the top two EAS providers globally.
TAG Company (UK) Ltd
Tel: 0800 781 3598
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