SINGAPORE (FNS) -- There's nothing glitzy about an NTUC FairPrice Supermarket, beginning with its modest red, white and blue logo. But in a little over a decade, the Singaporean chain has become this prosperous island nation's undisputed industry leader -- in size, growth, technology and vision.
That vision has never changed: to battle rising inflation by offering good value at the lowest price possible. Born in 1983 as a merger of three existing cooperative chains, the NTUC FairPrice Cooperative today counts 47 outlets and an equal number of franchised shops.
Despite its basic philosophy of "high volume, low margins," FairPrice earnings have soared during the past decade. The company's 1984 volume of $300 million Singaporean (about $187 million U.S. at 1993 exchange rates) yielded only $2.6 million Singaporean in profit while 1993 results registered $42 million Singaporean in profit on total revenues of $484 million Singaporean.
The outlets, which range in size from 2,000 to 36,000 square feet, are in the heart of Singapore's heavily populated public housing districts and in the city's suburban subway stations.
Often credited with spearheading the chain's success is General Manager Lim Ho Seng, an accountant whose low-key, unassuming demeanor mirrors FairPrice's image as the friendly, family grocery. Lim's first accomplishment was unifying the three organizations while operating the various supermarkets with only the help of inexperienced employees.
Today, FairPrice employs 1,800 full-time and 600 part-time workers who benefit from intensive commitment to staff training, dividends as cooperative members and other advantages, such as low-interest loans and educational study grants for their children.
Noted for its strategic marketing and emphasis on service, FairPrice is also the front-runner in supermarket technology. Since the end of last year, after a gradual two-year remodel, all FairPrice outlets are now equipped with bar-code scanning.
"The percentage of bar-coded goods was too low," said Lim, noting that Singapore was late to adopt the practice. "But somebody had to start, and now, of course, all the products have to be bar-coded and the other chains are following. So far, we use the information to identify fast movers. Automated inventory will be the next stage."
FairPrice is also in the process of setting up a central distribution and warehouse operation with Davids Holdings, a major Australian wholesaler and distribution services specialist. With about 12,000 items in stock, the new system is expected to improve logistics and slash costs considerably.
With land increasingly precious, Singapore now imports literally 100% of all foodstuffs. Malaysia is the produce source, with crops harvested in the day trucked in overnight. Indonesia provides other fresh fruits and vegetables, fish and pork, while processed food and dairy products are flown in from Australia.
"Lots of name-brand foodstuffs are imported from the U.S.," said Lim. "We benefit also from the U.S. and Australia being on different hemispheres and import whatever is in season -- grapes, apples, oranges."
With its massive buying base, FairPrice is also a firm supporter of private labels. So far, about 200 locally manufactured items carry the FairPrice label, including paper products, mineral water, snacks, cleaning and household products. As a staples supplier to other stores, the cooperative also is thinking of developing more independent labels.
Despite the generally sluggish retail scene and fierce competition, Lim is committed to continued expansion. "The small mom-and-pop stores are the most vulnerable," he says. "They can't stock enough items and we are competitive on price."
Regional growth is next on the agenda. FairPrice's flagship Malaysian outlet is opening in Kuala Lumpur's new Ampang Point suburban shopping center, with an eventual network projected to exceed the current Singapore chain. China joint ventures in coastal Fuzhou and inland Chengdu have been inked and negotiations are on the drawing boards in Indonesia, Vietnam and Cambodia.
