phil.jpgWhat do bottles of alcohol, nappies, CDs and DVDs, frozen and fresh meat, toys, pregnancy test kits and perfume have in common? The answer is they’re all items of high-theft merchandise found in supermarkets and grocery outlets, which are desirable, valuable, and readily sold on through illicit channels. Hence they are regularly targeted by shoplifters and need to be safeguarded. TAG Company, the Electronic Article Surveillance specialist, has been protecting high-value products like these in Britain’s stores since 1997, providing retailers with an unbiased, consultative and effective approach to loss prevention, based on its proven tagging solutions.

TAG provides retail tagging solutions using Best In Class 58kHz Acousto-Magnetic (AM) and 8.2MHz Swept Radio Frequency (RF) EAS technology. With comprehensive ‘cradle to grave’ service support to maximise the benefits from the widest range of systems, deactivation and tagging consumables, TAG has been chosen in recent years as EAS service provider and supplier for many leading retailers and supermarket chains, including Morrisons, Sainsbury’s, Woolworths and HMV. In addition, Wal Mart has endorsed TAG’s Series 58 security labels for use by its stores and suppliers globally. Over the last three years TAG has provided solutions to protect over 2 billion items of merchandise, and in 2008 alone is set to protect over 1 billion products. With a number of exciting new products joining its portfolio, including the unique and innovative EASiCap® bottle tag, and an active national partner programme under way in Europe, TAG is building on its reputation for excellence and innovation. Phil Doyle, TAG’s Europe, Middle East and Africa (EMEA) Managing Director, spoke to The Grocery Trader.
Visiting TAG’s EMEA headquarters in Harmondsworth, a quiet West London suburb near Heathrow Airport, it’s immediately apparent that TAG is totally focused on delivering security. From the secure entry systems to the fully functioning examples of retail security solutions installed at its entrances, along with protected retail merchandise, TAG is clearly all about security, and, in particular, Electronic Article Surveillance.

The man at the centre of TAG EMEA is Phil Doyle. Phil joined TAG in January 2005 as Managing Director, from Thales e-Transactions, the Chip & PIN experts. Having achieved major success building TAG’s UK business, he is now replicating the model across the whole of Europe, the Middle East and Africa. It’s been a busy three years for Phil and his team, but the effort has certainly paid off: “The UK is a stable marketplace for us now, with major customers including HMV, Morrisons, Sainsbury’s and Woolworths. The next natural step for us is to look at delivering our proven UK solutions to the rest of EMEA directly and through our new partner programme.”

In addition, TAG Company is also enjoying significant growth in the US using much the same business model as here. Wal-Mart’s recent worldwide endorsement of TAG’s Series 58 disposable labels marks the start of a new era for TAG around the world, says Phil: “Wal-Mart has issued a Source Tag communication to its suppliers globally, and Series 58 is now part of that solution. It means that this giant retailer now has an alternative source of supply for the disposable security labels attached by its suppliers to their merchandise items.”

Achieving the endorsement took time, but was relatively straightforward and based on value and performance: “We demonstrated to Wal-Mart that our disposable label not only meets their required levels of functionality but also makes sound commercial sense for their suppliers. Importantly, it is also available for all suppliers globally in easy-to-use applicators. Add to this our online source tagging support website and in-country experts, and a full solution is available – we’re a full source tagging solution provider.”

True Source Tagging with TAG
Before the Wal-Mart endorsement, TAG was already enjoying substantial success with its Series 58 in Europe and North America, shipping millions of labels per month, but Wal-Mart’s move paves the way for a jump to new heights. The market opportunity is estimated to be close to 7 billion labels per annum.

TAG currently protects well over 200 million items a year using source tagging, and is involved in source tagging projects with manufacturers in France, Bangladesh, India, South America, China, Egypt, Mexico, and the United States.

For the uninitiated, retail items can be security tagged at one of three possible stages. The first is the point of manufacture or packaging, which is ‘true’ source tagging; the second is at the distribution centre; the third is on arrival in store. Phil Doyle reckons true source tagging currently covers 50% of protected goods in the UK, and the level could hit 60% in the next 12 months. However, he feels the figure for source tagging will never reach 100% of protected items, as there will always be a requirement for specialist tags such as EASiCap® to protect alcohol. On the topic of EASiCap®, TAG feels this solution will be such a global success that it recently sealed exclusive global distribution rights for the product and is already supplying or trialling in the UK, mainland Europe and North America with major supermarkets and convenience stores.

“We’re working with everyone from drinks companies to clothing and toy manufacturers to help them protect their product and its packaging before it comes into the UK,” says Phil. “We have source tagging specialists and test centres worldwide. We can certify suppliers against retailers’ programmes, and hold data online for retailers so merchandisers and suppliers can verify them remotely.”

New items of clothing carry several different labels. Source tagging allows clothing manufacturers to customise the label incorporating the tag to carry product information, so it continues being useful after it’s deactivated. This serves to reduce the number of labels on the garment, and hence cuts manufacturing costs.

“Few other companies can offer what we do in source tagging,” says Phil Doyle. “We supply the correct, customised labels to suppliers; work with them to position the labels correctly; certify labels to retailers’ requirements; and audit stores to ensure the tags function properly with their systems. We even feed back to retailers if suppliers drop below agreed tagging compliance thresholds.”

Why Electronic Article Surveillance?
Electronic Article Surveillance (EAS) is an essential part of 21st century retail security practice, as shoplifting continues to be a major cause of losses in stores, along with theft by staff. The reasons given for shoplifting, says Phil, “range from necessity to profit to pleasure to mental health problems. The most popular items to steal are therefore alcohol, nappies, CDs, DVDs and electronic games, fresh and frozen meat, toys, perfume and pregnancy test kits.

“When you take these products in isolation and promote them in a specialist store, surveillance is so much easier. But in UK supermarkets the sheer size of the sales floor and the availability of multiple desirable products under one roof make the challenge for the retailer far greater – hence supermarkets use a combination of CCTV, EAS and man guarding to minimise shrinkage or loss. The challenge for TAG in protecting these retailers with EAS is that there’s relatively little uniformity of products. Hence we offer a combination of multiple solutions usually seen in specialist stores to protect the different product categories in these environments.

“There is no doubt in my mind that EAS is effective in tackling crime, both as a deterrent and in reactive mode,” says Phil. “But there’s currently no mechanism whereby proven, effective EAS means reduced insurance premiums for retailers. We’ve approached insurers on this subject, but one of the main sticking points has been the fact that the EAS industry (unlike man guarding) is unregulated. We want to change this and make it a professionally recognised specialist area.”

In the UK Phil estimates the annual market for supplying EAS equipment at upwards of £100 million, but with the advent of source tagging it is becoming more difficult to measure: “We’ve installed fifty thousand items of EAS hardware since 2001, and protected over two billion pieces of merchandise. Based on our data and customer feedback, we’re currently number two in the UK to a major legacy provider with equipment which was installed years ago.

“In the last two years, analysis shows that TAG has provided somewhere between forty and sixty percent of all new EAS solutions to UK retail, but given the hugely competitive and fragmented market we operate in here, that represents a huge proportion of the new programmes implemented in that time.”

In the past, proprietary software and constraining warranties have tied retailers to global multinational providers of EAS, says Phil, hence the large legacy estates: “The two original suppliers of EAS protect their warranties and customers very carefully to ensure ongoing revenue and profit. The reason for us launching Series 58 and providing both of the major technologies (Acousto Magnetic and Radio Frequency) rather than limiting clients to one or the other was to break the duopoly in the market. TAG represents choice, non-proprietary software and open interfaces. We’re trying to break down the notion in our industry that the EAS supplier ‘owns’ the retailer, and make it clear that we offer genuine choice.”

Integrated system solutions today represent around 60% of TAG’s business, the rest being tagging consumables such as labels and hard tags, “but with the rise in source tagging (where TAG works with suppliers outside the UK to support retailers in-country), the launch of EASiCap and the tremendous uptake of Series 58, that mix is gradually changing. Another important part of our offering is our service and support solutions, which allow retailers to give the headache of system maintenance to one specialist party. And breaking with the industry norm, we support multi-vendor solutions from our market-leading helpdesk.”

TAG stands out because it doesn’t just sell EAS products, says Phil: “We start by analysing and understanding the customer’s business, and then design a tailored solution to benefit a client’s business. We believe in giving customers an alternative: we founded the company around the strap line ‘now you have a choice’ to reflect our dedication to doing things differently, which is still very much the case.”

A busy year
Phil Doyle last spoke to The Grocery Trader at the beginning of 2007. It’s been an outstanding period since then: “In the UK the EAS market has seen further consolidation and a shake out of EAS providers, which has positively impacted on the level of service we’re called to provide. As Britain’s leading independent service provider, not only are we asked to provide in-store solutions and support them but we’ve been asked to take on maintenance of multi-vendor tagging solutions for more retail estates.”

In the UK TAG now manages the EAS programmes for over 3,000 sites, with first line support through its dedicated UK helpdesk. Major retail clients include HMV, Woolworths, Morrison’s, Sainsbury’s and a number of others they can’t name for confidentiality reasons. “In the last year we’ve taken on more UK project managers and engineers in-house, but we find that managing specialist third-party contractors for installation and service delivery is the most cost-effective way of providing a 200 plus strong network of support covering the entire UK.”

“One of our key differentiators is that unlike other EAS providers we try to avoid sending out engineers if at all possible. Why charge hundreds of pounds to have a specialist flick a power switch or move an object that interferes with a system? Almost half of calls we get from our clients are about problems that can be immediately rectified over the phone and involve simple remedies such as moving stock or picking up a stray security tag, and the rest of our requests are solved using First Line Resolution through an on-site engineer.” Phil estimates the service saves their own customers almost half a million pounds a year in avoidable service calls, and spares the environment over a quarter of a million road miles a year – gone are the days of simply despatching a service engineer to site and billing the client.

Since our previous interview, the UK has seen the impact of the blossoming Chinese industry for provision of low-cost EAS products, in particular disposable paper labels and plastic hard tags. Phil Doyle is not overly worried about this: “There’s certainly been a massive influx of Chinese-made EAS products, but for the most part consistent quality hasn’t materialised and expectations haven’t been met. The exception has been where European EAS specialists have sub-contracted to factories or partners where quality assurance is strictly managed against guaranteed specifications for retailers. Here it works well, and the industry is benefiting from top-class solutions with high levels of integrity and consistency but at an affordable price point. Originally it was tempting to simply buy over the Internet, but many UK retailers have turned away from this method of procurement and have looked to companies like TAG to deliver solutions which work.”

TAG’s devices – designed to protect
At Harmondsworth Phil Doyle talked me through the 2008 range of TAG’s EAS solutions, which were developed with multiple retailers in mind and presented at the EuroShop exhibition in Dusseldorf at the end of February. First of the new products is EASiCap®, the innovative bottle tag which is storming the market. It’s being used by Morrison’s and Tesco amongst others and undergoing trials elsewhere. “There’s huge interest in EASiCap®,” says Phil. “It’s very secure, acts as a benefit denial solution, won’t rip the bottle foil or seal (unlike other traditional tags) and is very easy to apply and remove by staff.”

EASiCap®’s greatest advantage over other solutions is its neat shape, which fits very well into presentation boxes and doesn’t take up valuable shelf space. The encapsulating cap is also clear, so the seal of authenticity can be seen, giving the solution strong international appeal:

“In Europe it is common retail practice to show the paper seal on the bottle top to prove the bottle is genuine,” says Phil. TAG expects to sell over 5 million EASiCaps in the next 12-18 months globally, gradually replacing the cheaper and less effective ‘UFO’ bottle tags.

TAG has also launched the Uni-detacher, which addresses the challenge for supermarket security of reducing tag detachers’ footprints at the point of sale. The Uni-detacher is the first device to be introduced with lanyard-based components so the detacher can be moved to the product. Up to five detachers fit on one module, with a compact 5” by 6” footprint, and the Uni-detacher is lockable to prevent shoplifters removing tags while it is unattended. By implementing a single platform with multiple detacher types, not only is counter space saved but cost is optimised. And, with supermarkets potentially requiring 4 or 5 specialist detachers for each of 20 to 30 points of sale, substantial cost savings can be made.

TAG’s breakthrough in the in-store tagging arena is its Series 58 Acousto-Magnetic (AM) disposable tag, the familiar white plastic ‘chicklet’ which TAG provides on reels in specialist application units, and its Series 8.2 paper RF (Radio Frequency) labels. The total combined global market for these two solutions is somewhere close to 12 billion units per annum, says Phil Doyle. “We hope to capture a fifth of this in the next three years.” Crucially, TAG’s own Series 58 label is manufactured in the US, which Phil believes gives them an advantage when it comes to consistency and availability.

Retailers and resellers alike can bulk-buy EAS tags direct from factories in China, says Phil, but there’s no guarantee of quality or compatibility with existing systems: “Numerous smaller resellers have tried to corner the market and failed due to non-delivery or sub-standard quality.” Most retailers who work with TAG tend to ask for customised or integrated solutions: “We supply resellers with our own unique products in EMEA as part of our partner programme (see below), but again, their business is to provide solutions, including consultancy, implementation and service, the same way we do. Here, our unique products complete their offering and enable them to deliver true value to a retailer.”

A wide choice of options
TAG’s other best selling solutions include Self Seal Tags (the UK’s leading disposable security seal), which can be customised in retailer logos to any design. TAG supplies 100 million of these units a year in this country alone. Self Seal Tags are security seals with enclosed security tags, used on desirable items like games, DVDs and shrink-wrapped clothing. TAG offers a broad selection of these products, to which it owns the intellectual property rights.

Another recent development for TAG is specialist meat labels, which it supplies to Morrisons, Sainsbury’s and other supermarkets: “As more retailers introduce EAS solutions and extend tagging to higher levels of desirable product, thieves naturally look for the next opportunity. Meat has become a big theft area. The problem with protecting it is that often labels won’t adhere, or the high moisture level means detection doesn’t work.”

TAG’s RF meat labels are moisture-resistant and adhere to the polystyrene trays of fresh and frozen meat. TAG offers meat labels branded with logos and information so they’re less obvious to thieves. The detection rate is “very, very high.”
Phil Doyle also showed me the new Multigrip, a novel wire mesh ‘spider’s web’ fixed in-store around products packaged in boxes, allowing ‘live’ merchandising of home entertainment products and other high-price items, instead of displaying empty packs on shelf. Multigrip’s built-in alarm reaches 98dB, the loudest volume allowed by law: if the wires are cut or if the product is taken past the EAS gates without removal of Multigrip, both the gates and tag alarm. On a global level, Phil predicts this type of specialist tag reaching the same 5 million per annum volume sales as EASiCap®.

TAG takes on new partners
As MD for EMEA, Phil is responsible for all elements of TAG Company’s business in this part of the world, including operations, service, sales and marketing. He has just launched a partner programme to address the fact that up to now the UK has been TAG’s only major office in Europe, and the company is strengthening its infrastructure in that geography. The first partners were formally engaged at the EuroShop show in Dusseldorf:

“We’ve signed agreements with twenty partners so far. They are all companies with strong existing relationships with retailers, providing EAS solutions or general security, CCTV or access control, and share our ambitions regarding providing greater breadth of service. We’re not stopping there: we’re open to further approaches from other potential partners in Europe, the Middle East and Africa.”

Throughout the EMEA region TAG and its new partners provide exclusive solutions with four or five types of proprietary product. These solutions are developed jointly between Phil’s team in Harmondsworth and TAG’s other offices in Pompano Beach, Florida. As the EMEA organisation reaches out to new countries, so does the North American team, which is now seeing success directly with major retailers and via its own reseller channels.

As the major Western European retailers head East in search of business opportunities, Central and Eastern Europe now present the largest potential market for TAG in EMEA, says Phil. TAG has everything in place on the production side to achieve this, in terms of capacity: “In parallel to signing reseller partners, we’ve signed agreements with our factories and third party manufacturing partners, so there’s no problem with future supply as we expand.”

Phil has been spending a lot of time abroad recently setting up the partnership programme, but is now recruiting a channel management team to work with the new partners: “We are putting together the support infrastructure to ensure our reseller partners succeed in delivering our solutions to market; it’s in our interest to give them every support possible to help them.”
In the past, up to 90% of TAG’s global revenue has come from the UK. “This proportion is changing every week,” Phil reflects, “as our business in other EMEA countries grows through our partners, and our North American business reaches new heights following the Wal-Mart endorsement for Series 58. We’ve been conducting trials with a host of major US retailers over the last two years, and we’re expecting agreements to be signed as we enter our new financial year in July.”

Designing a solution
When designing a tailored solution, the biggest challenge for TAG Company is the sheer expanse of space in today’s stores that needs to be safeguarded. TAG recently implemented estate-wide bottle protection for Sainsbury’s. This involved over 1.5 million bottle tags and more than 6,000 detachers across the estate, plus staff training in using them correctly, all implemented in just over six months without impact on trading. TAG also recently completed the Woolworths 820-store EAS programme, which required a run-rate of approximately 4 stores a day to deliver hardware systems, labels, hard tags, training and the introduction of its source tagging initiative. Current large programmes include Morrisons, which will see 300 of its stores protected with TAG’s EAS solutions over the next 18 months following trial and subsequent rollout of its EASiCap solution.

Twenty-four hour opening adds to the pressure on EAS suppliers, who have to provide service and implement solutions in trading hours. Installation teams must be in and out quickly, working with store staff to minimise disruption.
“It’s crucial for EAS vendors to understand how supermarkets merchandise their products, and the shelving they use,” Phil points out. “You can’t come into the store with products that impinge on shelf space, branding or product information. The drive to supply more information on pack means you can’t cover it up. In addition, the supermarket environment is fast-moving and dynamic; managing complex programmes whilst working in the background is a skill we have built up over the past few years.”

EAS best practice, he observes, is about striking the balance between making the product secure from thieves and putting people off buying it. “Our solutions focus on return on investment for the retailer,” says Phil. “They have to work! The bottom line is that if the tags don’t stop thieves, you end up losing both the product and the cost of the tag. But if the tag impacts on saleability, then sales are lost and the solution hasn’t done its job either.”

When a retailer invests in EAS, buy-in within the organisation must be at the highest possible level, Phil insists: “Everyone in the store needs to undergo training. We often find staff’s interest wanes after the first few months, so it’s down to the EAS service provider to stress the need for ongoing training and tagging compliance. We create a customised Tagging Procedures manual for each outlet, and provide face-to-face training either on site or at a training centre when we install or refresh systems – that’s key to achieving payback. With big projects we train the trainers, who then instruct their staff. We have also delivered intranet- or CD-based training for use in staff induction.”

A complex EAS solution typically takes weeks to design, then a couple of months to implement, trial, prove and develop a business case, says Phil, “but after board approval is complete, we have ability to deliver the fastest estate-wide roll-outs in the UK.” TAG’s fastest completed project so far was for Woolworths, rolling out 820 stores in nine months.

Set-up costs for the EAS platform – the hardware and initial supply of tags – can be over £10,000 for a large supermarket, or up to £50,000 per store for a complex solution including remote monitoring, people counting and customised tagging solutions. Equipping a supermarket with 40 checkouts can cost in excess of £10-15,000, for the hardware alone. However, TAG’s solutions start as low as £1,300 for single-store locations.

The way forward
In the UK, Phil Doyle predicts demand for EAS solutions from supermarkets and convenience stores will continue to grow, and tagging of more and more products will send shoplifters to different parts of the store, looking for new opportunities.
“Adoption of source tagging is the major future growth area for EAS,” Phil confirms. “The concept has been here for some time, but until we came into the market, the available implementers were somewhat inflexible and their solutions were based on their proprietary technology. The introduction of Series 58 has acted as a catalyst to the concept, and we are working on a number of large, global projects with retailers and their suppliers right now.”

Source tagging takes a year to set up with a major retailer, says Phil, and it can take another year to maximise suppliers’ compliance. However, once the system is up and running, the benefits are clear; connected IT systems around the world mean barcodes can be distributed instantly along with logos and branding, and applied to EAS security labels within seconds on the other side of the world.

“The market value growth from increasing levels of EAS adoption is being impacted by the decreasing cost of ownership of the technology, and more small vendors will drop out as a result, levelling to three to four stable suppliers in the next year. Source tagging will have a positive impact on EAS vendors’ bottom line, but the resulting revenue will likely be seen outside the UK, and any EAS provider who isn’t global like TAG will struggle.”

It’s good news all round for Phil and his colleagues: “If everything goes to plan, I see us potentially doubling our revenue in twelve to eighteen months, having an EMEA presence through the partner programme and new offices outside the UK, and also teaming up with our operations in the US and Asia/Pacific to provide an improved global service for TAG’s growing number of international accounts. It’s going to be an exciting time for our business.”

Tel: 020 8283 4999

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