People

For FairPrice, it's social mission above profit motive

CEO Seah Kian Peng made the decision for FairPrice to stop selling suspected haze culprit Asia Pulp and Paper's products, including its existing stock, which would have cushioned the supermarket chain's losses.
CEO Seah Kian Peng made the decision for FairPrice to stop selling suspected haze culprit Asia Pulp and Paper's products, including its existing stock, which would have cushioned the supermarket chain's losses.ST PHOTO: AZIZ HUSSIN

To be socially responsible, retailer willing to make a loss and not pass on costs to shoppers

When Asia Pulp and Paper (APP) was named by the authorities as suspected of contributing to the haze in late September, FairPrice chief executive Seah Kian Peng knew that there was only one decision to take.

The brand had to be taken off the shelves of all FairPrice supermarkets here, even though it would cost the cooperative "millions of dollars".

The hazy issue first became clear to Mr Seah and his team when the National Environment Agency fingered APP as one of the culprits for the fires in Indonesia last month.

PEOPLE BEFORE PROFIT

This goes back to 1973, when we were first set up during the oil crisis to make sure some essential products remain available and affordable.

MR SEAH KIAN PENG, chief executive of FairPrice, on the supermarket chain's role as a social enterprise

FairPrice did not take the products off the shelves immediately because it wanted a full and proper investigation by the authorities before acting.

Instead, it monitored the situation and had meetings with "parties concerned" including the distributor of APP products here.

But when the Singapore Environment Council announced a temporary restriction on the use of the "Singapore Green Label" certification for APP products on Oct 7, Mr Seah knew what he had to do.

That same day, the supermarket chain pulled all APP-related products off its shelves.

FairPrice carried a total of 18 APP-related products, including two housebrand paper tissue products, across its 290 stores in Singapore. Products linked to APP, one of the largest pulp and paper companies in the world, constituted almost 20 per cent of all paper products sold in FairPrice.

FairPrice could have chosen to simply stop buying from APP and sell off its remaining stock to cushion the losses, said Mr Seah, 53, who was among four regional business leaders recognised by Asia Responsible Entrepreneurship Awards in June for promoting corporate social responsibility practices.

"But, as a socially responsible retailer, this was the right thing to do," said the father of two children, aged 20 and 23.

Mr Seah, who is also an MP for Marine Parade GRC, said that this episode reflects FairPrice's role as a social enterprise that "regards social objectives as important as its business objectives".

As an industry leader, with 59 per cent of the market share, FairPrice has the responsibility to effect change in the marketplace.

Soon after FairPrice removed APP products, other major supermarket chains also moved to withdraw or stop buying from APP, he noted.

While customers gave the move a thumbs up, many also asked if FairPrice would be passing on the costs of its paper products to the consumers in the form of price hikes.

That will not happen, because FairPrice's goal is not to maximise profits but to fulfil its social mission of helping to moderate the cost of living here, said Mr Seah.

"This goes back to 1973, when we were first set up during the oil crisis to make sure some essential products remain available and affordable."

This is not the first time it placed its social mission above the profit motive, he added.

Back during the severe acute respiratory syndrome (Sars) crisis in 2003, the H5N1 bird flu crisis in Asia in 2004 and the recession in 2008, FairPrice had ensured there was a stockpile of supplies, while keeping prices constant.

"We try to be the last to increase prices and the first to drop them," he said.

For Mr Seah himself, working in FairPrice for the past 15 years has been a rewarding time.

He had helped to expand FairPrice's retail footprint here, expanding not just the number of stores but also creating new formats of retail experiences.

Previously, there was just the supermarket. Today, FairPrice has hypermarts, convenience stores and online shopping options for consumers here.

This has, in turn, helped the chain to grow its market share by nearly 10 percentage points since he joined in 2001 as its chief operating officer.

In 2010, he was appointed FairPrice's chief executive.

FairPrice has annual sales of some $3.2 billion but it also gives back in a big way to society.

The cooperative has given a "significant part" of its profits - totalling $88 million - to its FairPrice Foundation over the past 10 years to support various charitable causes.

Last month, it pledged to donate another $50 million to the foundation by 2020.

"FairPrice wants to be a brand that is not just noticed and respected. What we do must lead to a better outcome (for everyone), and we're here to stay," said Mr Seah.

A version of this article appeared in the print edition of The Straits Times on October 26, 2015, with the headline 'For FairPrice, it's social mission above profit motive'. Print Edition | Subscribe