Speech by Prime Minister Lee Hsien Loong at NTUC FairPrice 40th Anniversary Dinner

 “For The People, From The Heart”

Mr Ng Ser Miang
Chairman of NTUC FairPrice

Mr Tan Kian Chew
Group CEO

Mr Seah Kian Peng
CEO

Distinguished guests, ladies and gentlemen

1.    I am very happy to join you this evening for NTUC FairPrice’s 40th anniversary.

NTUC FAIRPRICE

2.    FairPrice’s roots go back a long way, to the late-Dr Goh Keng Swee, who urged the labour movement to set up cooperatives to improve the lives of its members. In 1973, NTUC set up the supermarket cooperative NTUC Welcome. This was during the OPEC oil crisis, when oil prices more than doubled and triggered sharp rises in food prices, so that at its peak, inflation exceeded 20% in one year.

3.    Welcome aimed to offer daily essentials at affordable prices. This was not easy, because prices of items like rice could double in a month, making purchasing decisions very stressful. Part of the reason for the high cost of food was the inefficient supply chain. There could be five or six middlemen between the importer and retailer, and each needed to make his margin, his cut. Welcome did away with the middlemen to stabilise prices and curb profiteering. The union movement and the Government chipped in. Unions provided seed capital, and members volunteered to help out in the stores after work. They also campaigned to sign up members for Welcome, to give the co-op a solid and loyal base of customers. The Government assured Welcome of a reliable supply of essential goods and countered the threat of wholesalers who tried to reserve goods for their favoured provision shops. The Government also provided important advice. Then-Minister Lim Kim San gave Welcome’s first Chairman and CEO Dr Baey Lian Peck $250,000 and said “keep prices low, fight inflation, but don’t lose money doing it!”.

4.    In 1983, 10 years later, Welcome merged with the Singapore Employees Cooperative to form NTUC FairPrice. Since then, FairPrice has never veered from its mission of keeping prices of essentials affordable. It has absorbed GST during economic downturns, helped its SME suppliers tide over financial crises, and offered attractive discounts for its housebrands.
 
5.    In crises, FairPrice has provided Singapo­rean consumers with precious reassurance and security. During SARS, FairPrice employees continued to do their jobs despite the widespread fear and anxiety in the wider community. Several FairPrice employees in fact fell sick and had to be quarantined. Many others soldiered on. As Mr Gerry Lee, who is MD of Business Groups, recalls:

“Our customers still needed their groceries. We were not going to let them down. We had to assure our customers that the food we were providing was safe and that they need not panic buy and overstock food.”

6.    This episode is one example of FairPrice’s dedication to its social mission. FairPrice would not have succeeded for 40 years without competent management, devoted employees and trusted, reliable suppliers. I am happy to see many of you here with us tonight. My warmest congratulations to you, the FairPrice family and to FairPrice itself on reaching this important milestone!

Meeting New Challenges

7.    FairPrice must continue to adapt to the changing business and social environment.
 
8.    In 40 years, the retail landscape has completely changed. FairPrice is no longer an upstart competing against provision shops or trimming inefficient supply chains. Today, FairPrice is a major player in a far more competitive and diverse market. There are retailers catering to every customer segment, from Sheng Siong and Giant at one end, to Jason’s and specialty grocers at the other. Many consumers shop online for high-end produce from overseas retailers.

9.    With greater affluence, and rising expectations, Singaporeans now want to shop in comfort. They expect not just basic essentials, but good service, fresh produce and higher-quality food. They are widely travelled and more discerning. Some customers want to know whether the milk is organic, whether the salad is biodynamically harvested or whether the steak came from a cow that was grass-fed or grain-fed.

10.    FairPrice has responded to these changes by expanding its distribution networks and product offerings. FairPrice stores offer much better shopping experiences. Cheers outlets in petrol stations and housing estates serve casual shoppers. FairPrice Finest and FairPrice Xtra hypermarkets cater to a wider range of customers. I hear the experience in FairPrice stores is so good that newlyweds even shoot their wedding photos in FairPrice!
 
11.    But despite these changes, FairPrice cannot forget that it still has a critical social mission, and that is to reassure Singaporeans that they can get good quality groceries and essentials at affordable prices. Singaporeans may be much better off, and spend more on higher-quality products and the finer things in life, but the cost-of-living remains a concern to many households. And one can never predict when the supply of essentials may be disrupted, whether due to emergencies such as SARS, or overseas incidents like the Thai floods in 2011, or some disruption in the global markets, such as happened to the rice business from time to time.
 
12.    In these situations, FairPrice provides an important assurance to Singaporeans that they will always have somewhere to turn to for their basic needs. By diversifying its sources, FairPrice ensures a reliable supply of essentials should any disruption occur. FairPrice housebrands offer good quality products at affordable prices. By freezing prices of essential goods at critical moments, like during the global financial crisis or the Thai floods two years ago, FairPrice gives people comfort that they will not be victims of profiteering. That is why FairPrice remains a co-operative after 40 years instead of having being sold or listed, so as to uphold its social mission and links with the community.
 
13.    FairPrice must continue to do this and uphold this social mission even as it adapts to the future. It must find new ways of cutting costs, and delivering better value. It must harness technology to raise productivity and share the savings with customers. It must continue to ensure a reliable and affordable supply of essentials by diversifying its sources and stockpiling important products.
 
14.    FairPrice must also continue to give back to its members and the wider community. FairPrice’s social mission is one critical reason why it has become  a valued part of our social landscape. I therefore welcome Mr Ng Ser Miang’s announcement that FairPrice will donate another $40m to its staff, members, the Labour Movement and to its customers. This strengthens the social compact between FairPrice and the public, and sets the bar for social enterprises in Singapore. It is also an important draw for younger employees who want to work in an organisation that is a responsible corporate citizen.
 
15.    At the same time, what Mr Lim Kim San told Dr Baey Lian Peck years ago still holds: “Do well, keep costs low, don’t lose money”.  FairPrice has to stand on its own feet and compete fairly with other commercial entities. FairPrice is not a charity; it is not a food bank. This makes FairPrice’s social mission particularly challenging, and its success that much more remarkable. That is why FairPrice must always be managed professionally, with strict financial discipline and sound business practices.

CONCLUSION

16.    In a world where income distributions are widening and trust between businesses and workers is eroding in many countries, NTUC FairPrice can stand tall as a social enterprise that has served its members well and forged strong ties with the wider population. It has grown from humble beginnings into one of the largest grocery retailers in Singapore, while maintaining its mission of keeping prices affordable and giving back to the community. As the backdrop says, FairPrice has always been “For the People, From the Heart”. I am confident that FairPrice will continue to uphold its social mission and strengthen its community links for many more years to come.
 
17.    Once again, my warmest congratulations to FairPrice, and to all of you, have a very good evening.  Thank you very much.