Knogo Electronic Surveillance Systems
Lead in Battle against Shoplifting
EVERY YEAR AN ESTIMATED $26 BILLION in $863,000 for the period, compared with a loss of $1.1
merchandise is lost through shoplifting. Until 1966, million during the earlier period.
when Arthur J. Minasy formed Knogo Corporation, the Not only soft goods retailers have installed EAS
world's first electronic article surveillance (EAS) systems, Knogo is rapidly growing in the electro-
manufacturer of radio frequency and electromagnetic magnetic field and supplying the hard goods industry.
systems, retailers had little chance of stemming inven- "Retailers have been quick to realize the potential of
tory shrinkage through shoplifting. this new system" says Minasy, noting that Universal
"We've stayed in the forefront of the industry EM systems are already being used in supermarkets,
because we sell systems that work," says president and drug stores, liquor stores, shoe stores, book stores and
chief executive officer Minasy. "Both of our radio fre- record stores. Even hospitals have instituted the
quency and electromagnetic systems protect retailers system. A New York hospital, for example, lost
and deter shoplifters by conforming to the high criteria approximately $90,000 in linens the year before
standards retailers demand in EAS systems. installing the Knogo system. Losses were cut
"Knogo's patented systems monitor only the tags dramatically when the system was installed.
and keep retailers from stopping innocent customers. The Universal EM system consists of a strip of
Other EAS systems have been known to sound an paper containing a specially treated alloy which can be
alarm in error because a calculator, keys or even "married" to the standard Universal Price Code or
pacemakers can set off the sensors. Because of our simply attached to an item like a common store tag.
special technology, a Knogo system rarely makes this The strip will trigger anti-theft alarms located at all
kind of identification error," explains Minasy. exits unless it has been deactivated by the cashier.
"With a variety of sensor devices, from a free- Because the Universal EM tags are more versatile
standing pedestal such as Knogo's Universal Mark VII, and less bulky than the tags of other technologies,
to an unobtrusive ceiling-mounted system, Knogo can retailers can now protect virtually every item in their
tailor each system to meet the specific needs of each store. Since these tags cost only pennies, they can be
retailer," says Minasy. Noting that Knogo's product economically used as one-way tags, being
line is diverse enough to meet the needs of stores from automatically deactivated at the checkout.
supermarkets to malls to Paris boutiques. Earnings Increase Expected
Experts estimate that only five percent of the
domestic soft goods market and an even smaller Knogo, headquartered in Hicksville, N.Y., has
percent of the worldwide market have been penetrated worldwide offices. It expects to reap the first real
by EAS systems. Yet Knogo's aggressive marketing rewards from sales of its Universal EM systems during
techniques and reliable systems have given the fiscal year 1984. By the end of the company's fiscal
company an edge both at home and abroad. year, February 28, 1983, the company expects earnings
"Stores like Ohrbach's, looking to replace inefficient to increase from 20c per share for nine months, to
EAS systems, tested them against Knogo's and decided approximately 30c per share for the full year.
to go with Knogo," says Minasy. Losses during the previous year were mainly the
Revenues, Profits Up Sharply result of an increased marketing effort around the
electromagnetic (as well as the radio frequency)
system, and the company's decision to adopt a "more
During the first three quarters of the current fiscal conservative approach to recording revenues." The
year, revenues were up to $15.8 million for Knogo company is further bolstered by an increase in its share
Corporation, compared with $9 million revenues for of the U.S. market. Knogo, which has a manufacturing
the corresponding nine months in the preceding fiscal facility in Baudour, Belgium, also holds a substantial
year, Operating profits were also up sharply, rising to share of the European market. .
$2.5 million, compared with a $724,000 loss the first Until 1983, Knogo's U.S. sales lagged behind it
six months of the previous year, and net profits were
European sales percentage. In 1980, only 23% of the total company sales were from the U.S. In 1981, this rose to
29% and in 1982 to 36%.
With its new EM penetration, and with recent RF sales to Ohrbach's, Federated Stores and Supermarkets General
(at $1.2 mil1ion, Knogo's largest single domestic sale ever), the company expects that 50% of all sales will be
generated in the U.S. during 1983.
Frederick Research Corp., an independent corporate research firm, estimates that the entire EAS market will
grow "in excess of 20% compounded annually for the next five years. Knogo has both the technological and
marketing resources to grow by about 40% in revenues per year and somewhat faster in net earnings."
Knogo is in a good position to take advantage of this potential, according to the report. Not only is the firm "acutely
aware and intensely involved with major innovations within the industry," says Frederick Research, "but has
actively sought and subsequently been fortunate enough to hire a number of the most prestigious marketing experts
in the electronic surveillance industry. The company has a young and vital management, ensuring many years of
capable, dynamic leadership.
"Knogo-represents a rapid growth situation even in the present economic environment and as a consequence
offers unusual intrinsic speculative possibilities."
As Knogo grows, the outlook for shoplifting should dim considerably. That will not only help the retail industry,
but benefit the general economy as well.