Makers collaborate with system users on new EAS tag technologies for greater retail chain efficiencyChina manufacturers of EAS tags and systems are exploring source tagging and RFID technologies, keen to boost margins through product differentiation rather than price competition.
Spurred by broadening adoption in the global retail industry, more companies are looking to the former as a growth spot. Source tagging requires the embedding of an EAS label into a device’s primary packaging or the product itself at the point of manufacture. This translates to greater retail chain efficiency, and subsequently improved profitability.
Demand for the technology has climbed in recent years, compelling EAS system suppliers to work on increasing their production capacity. To date, more than 5,000 retailers and 30,000 makers are using source tagging systems, among them, Wal-Mart, Best Buy and Autozone. Utilization rates in the US and Europe reached 50 percent last year, according to Centre for Retail Research, up from 45 percent and 40 percent, respectively, in 2007. CRR projects two-digit annual growth rates for the technology in the next two or three years.
To take advantage of the momentum, China EAS tag and system suppliers are working toward direct collaboration with users to expand sales channels, reduce intermediate links and improve margins. Many makers are now serving the requirements of major retail chains. Beijing Shunte Science and Technology Co. Ltd, for instance, has been chosen by a well-known European shoe chain to provide EAS systems and put EAS labels into its shoes before leaving the factories. Hangzhou Century Co. Ltd is enhancing its EAS tag manufacturing process to cater to the unique demands of source tagging.
Meanwhile, RFID technology remains a key R&D priority for many China companies. Besides being able to handle large volumes of information, RFID serves as a reliable data carrier through various stages and departments, from production to logistics down to retail. Its use therefore helps retailers improve operational efficiency and prevent shoplifting.
The main hurdles for market penetration are limited applications and high costs. To spur adoption, makers are tapping China’s robust RFID industry. Releases from this sector have been and continue to be widely employed in logistics and supply chain management, prompting analysts to forecast a CAGR exceeding 20 percent in coming years.
The typical RFID used for EAS systems runs on the HF or UHF spectrum, and has a reading distance exceeding 10m. Shenzhen Promatic Security Systems Co. Ltd has released an RFID-based brand clothing solution that can record information in an RFID tag attached to a clothing item. The data covers materials, production and QC, washing instructions, and distribution, stock and sales details. This system helps prevent shoplifting and unlawful imitation. Retailers can also utilize the recorded information to improve stock management and customer service.
Buoyed by the growth potential of RFID-based EAS systems, more players, including those that focused previously on traditional EAS devices, are prioritizing R&D on the former. An example is Hangzhou Century, which has invested some $15 million to develop labels and readers based on the technology for its EAS systems.
RFID developers and suppliers venturing into the EAS business are also among the most active proponents of the category.
The greater cost of RFID solutions compared with RF or AM counterparts, however, is expected to continue limiting adoption among retail establishments. Today, RFID tags and labels are attached mainly to high-ticket items. A typical label is 10 to 20 times more expensive than a traditional RF or AM alternative.
Most China manufacturers, however, expect prices to drop once mass production begins. Industry analysts project RFID-based systems will penetrate the mainstream by 2014.
Another key R&D initiative is systems integration. Makers are linking EAS, CCTV surveillance, and even intruder alarm, access control and logistics management into a unified solution to improve operational efficiency.
Shenzhen Promatic, for example, offers a total loss-prevention and business-protection setup that integrates alarm, access control, CCTV surveillance and patrol functions with an EAS system on a unified platform. Such approaches are expected to satisfy buyers’ changing requirements and respond to market developments.
China is currently one of the world’s key hubs for EAS systems. The country supplies 40 percent of the global market, according to local market research firm Heading Century. Manufacturers take advantage of low costs, high price-to-performance ratio and product diversity. A few companies have started providing ODM services to major brands.
The local EAS industry is expected to post annual growth rates of 25 to 35 percent in 2011-12 after rebounding strongly last year. Tags and labels, in particular, form the bulk of output and sales. Total output of these devices in 2010 reached 375 million and 8.5 billion, respectively, with more than 80 percent of them shipping overseas.
The main export destinations are North America and EU countries, which have huge loss-prevention budgets.
Detectors, deactivators and other accessories accounted for a small percentage of total production and were sold mainly in the domestic market.
Meanwhile, China suppliers claim a 25 percent share of the global soft label output. Some of the major enterprises in this sector are Beijing Shunte, Shanghai Asialco and Novatron. In the tags segment, several large makers boast an annual capacity exceeding 200 million units. These include Hangzhou Century and Hangzhou Ontime Electronic Technology Co. Ltd.
Zhejiang and Guangdong provinces are the major sourcing centers for EAS products. Manufacturers based in the first specialize in tags and labels, while their Guangdong counterparts provide total solutions.
EAS systems from China include tags, labels, detectors or pedestal antennas, deactivators, accessories and management software. Mainstream models adopt RF or AM technology.
AM systems, meanwhile, typically work on 58kHz. These do not require the use of metal shields. The higher cost and technology threshold, however, hinder many companies from focusing on this category. Most direct their efforts toward RF models, providing AM solutions to select customers only.
China-made EAS tags and labels come in many forms to cater to users’ requirements and fit different hardware. Selections constitute hard, ink and lanyard tags, safers and labels in various dimensions. Manufacturers of labels are setting their sights on small and irregular forms. Some have released 30x30mm units with performance comparable to 40x40mm RF labels.
On top of mainstream models, suppliers are developing multiplex tags powered by both RF and AM chips to raise protection levels. Several high-end versions come with alarm function to alert store personnel.
As for detectors, the latest variants have DSP and AGC features to enhance system reliability and stability. A typical detector has a 70 to 180cm detection range, while a mono variant boasts a 140 to 240cm operating distance.
Manufacturers are also improving aesthetics, introducing new colors and patterns. Although transparent units with clear acrylic textures are still the most popular, some suppliers have developed invisible detectors that can be integrated into an establishment’s architecture or furniture.
The raw materials and components are the plastic parts, hardware mechanism, coils, capacitors, aluminum foil, tape, diodes, connectors, chips and circuit boards, most of which are sourced locally. Spending on copper, aluminum and plastic climbed steadily in recent months, thereby raising production spending. Most interviewed companies, however, said they will not increase prices because of fierce competition.
Besides input costs, quotes are determined by system configuration. A basic, RF-powered EAS sensor housed in an ABS plastic frame lists at about $100, while a more advanced model with DSP and AGC is between $200 and $400. Midrange RF units with mono structures are available for $800. AM variants are considered high-end and start at $2,500. Tags range from $0.10 to $0.60. An RF label goes for $0.010, and an AM type $0.020. An RFID label lists at $0.20, while a detacher is between $15 and $10.
Model: EAS Label
Note:This article was originally published by Global Sources, a leading business-to-business media company and a primary facilitator of trade with China manufacturers and India suppliers, providing essential sourcing information to volume buyers through our e-magazines, trade shows and industry research.
All price quotes in this report are in US dollars unless otherwise specified. FOB prices were provided by the companies interviewed only as reference prices at the time of interview and may have changed.
Disclaimer: All product images are provided by the companies interviewed and are for reference purposes only. Those product images featuring products with trademarks, brand names or logos are not intended for sale. We, our affiliates, and our affiliates' respective directors, officers, employees, representatives, agents or contractors, do not accept and will not have any responsibility or liability for product images (or any part thereof) which infringe on any intellectual property or other rights of a third party.