The Red Tag Experience in Australia

1
The Red Tag Experience in Australia

• As at 1st December 2002

2
Agenda

• Introduction to the Australian Market
• How Red Tag was selected
• Retailer issues
• The time line challenge
• Studio and Replication issues
• Retailer uptake
• Results to date

3
Introduction to the Australian Market

• DVD a success story.
• Market dominated by a few retailers (eg CML
  controls 45 of this market)
• Shared vision by all industry players.
• BUT,
• Retail theft emerging as a major problem.

4
Australia - the perfect Test

• Western style market with a diverse population
  profile
• Both major metropolitan and rural locations
• Concentrated retail and studio industry structure
• Viable scale and isolated geographically
• ie. we could get quick decisions and move fast,
  plus obtain meaningful results for other western
  style markets

5
Retailer issues

• Using safers drives up labour costs and slows
  customer transaction time.
• Not using safers means theft explodes!
• Stock not getting on show FAST because loading
  safers is slow and safer stock is limited.
• Library systems deliver high staff costs,
  customer complaints and refunds.

6
How was Red Tag selected?

• Coles Myer Limited trials
• Source tagging
• In store tagging
• Safers
• Lockable cases - (Viva and Amaray)
• Active support from HMV, Borders, Woolworths and
  Harvey Norman
• Result selection of Red Tag.

7
The time line challenge

• Studios initial position Not my problem
• Studios wanted an instant solution.
• Retailers wanted an incremental transition.
• We all agreed for the industry to pack in the new
  format boxes from 1st August 2002.
• Retailers then changed over from that date.
• Completion expected Mid 2003.

8
Studio and Replicator issues

• Studio issues.
• Existing stock in warehouse.
• New releases.
• Additional costs.
• Imported stock.
• Educating their marketing teams!

9
Studio and Replication issues

• Replicators.
• Auto packing no re-investment.
• Manual packing for small runs.
• Pre packed imports.
• Existing box stock held.
• Changes in box prices.

10
Multiple EAS Formats

• Coles Myer AM trials proved that secure packaging
  delivered the outcomes required.
• But no solution was available for the RF EAS tag
  limiting the scope.
• Red Tag were able to deliver an acceptable RF EAS
  tag solution using ferrite heads.
• Red Tag EM option is also available.

11
Installation

• Retailers purchase locking tags and de-taggers.
• Magnetic de-taggers installed at POS
• Inserting, removing and re-cycling Red Tags
  within the Stores proved easy and quickly became
  routine.
• Staff training is straight forward .
• Maintenance is nil.

12
Implementation to date

• Studios
• All Studio new releases are Red Tag
  compatible.
• Repeat replication of all product is Red Tag
  compatible.
• Stock on hand in Studio warehouses and Stores
  are being cleared rate varies.
• Imported stock still to be resolved held off
  until 2003 to review volume (5?).

13
Retailer Uptake
This represents more than 80 of DVD retail sales
in Australia
14
Retail Outcomes

• Level of theft dramatically reduced.
• Transaction time reduced, less queueing.
• No changes required to store shelving.
• Store labour costs substantially reduced.

Sustained increases in sales across all titles
and all retailers
15
Sales Drivers

• Stock on show faster than ever before
• Full range on show is now the standard.
• Out of stocks are reducing as the order model
  catches up with the new sales pattern
• Back catalogue sales have proved to be a real
  winner
• DVD can now be displayed throughout the store in
  high traffic locations and cross product
  promotions.
• Customer complaints what complaints?

16
A real example (1)

• Metro Melbourne.
• 24 hour trader, high volume store, medium
  security risk. Trial Store since Oct 2001.
• Hand stripped and repacked ALL DVD stock into Red
  Tag boxes FROM Oct 2001 to August 2002.
• Refused to drop this workload once trial results
  had produced a 200 PLUS sales increase by
  February 2002.Sales are still increasing!

17
A real example (2)

• Metro Sydney.
• 7 day a week trader, low volume store, very high
  security risk. Trial Store since Oct 2001.
• Hand stripped and repacked ALL DVD stock into
  Viva boxes FROM Oct 2001 to March 2002. Then
  changed to Red Tag boxes.
• Refused to drop this workload
• Unit sales in Oct 2001 - 65 units pw
• Unit sales in Nov 2002 - 531 units pw