Challenging for FairPrice to keep prices low amid inflation, even as it offers discounts: CEO

Group CEO of FairPrice Group Vipul Chawla, who took on his new role in April, was previously the president of Pizza Hut International. ST PHOTO: NG SOR LUAN

SINGAPORE - It will be challenging for supermarket chain FairPrice to keep prices consistently low, as Singapore and the rest of the world grapple with high levels of inflation, said group chief executive of FairPrice Group Vipul Chawla.

And the pressure to keep prices low will become even more intense in the next 12 to 18 months, he said during an interview with The Straits Times.

Mr Vipul said: “We are facing unprecedented levels of inflation. While we will do the best we can to fund (discount) programmes, inflation is real.

“We source our goods from all over the world. We are not in control of the prices they sell to us, and yet we are holding prices or offering discounts. That does become challenging.”

But Mr Vipul added that should prices need to be corrected to keep up with inflation, the increase would be “fair” for consumers.

Earlier in November, FairPrice said it would be giving a 1 per cent discount for 500 commonly bought items for the first half of 2023 to offset the increase in the goods and services tax (GST).

The grocery chain has various discount programmes throughout the week, and previously slashed prices on specific items, such as eggs and cooking oil, when they became more expensive.

These discounts are funded in different ways, such as by using economies of scale to get a better bargain with suppliers. But in some instances, profit margins will still be impacted, especially when the supermarket absorbs the price increases, said Mr Vipul.

One example was during Malaysia’s export ban on chickens to Singapore in June. The last-minute scramble to make sure shelves remained full resulted in some additional costs that were not passed on to consumers, he said.

The ban was one of many challenges that have been keeping him busy since he joined FairPrice in April.

Before that, Mr Vipul was president of Pizza Hut International, a brand under American fast-food company Yum! Brands. He previously worked at consumer goods company Unilever, where he held a number of roles.

In addition to challenges arising from inflation, finding ways to strengthen the supermarket’s supply chain networks amid a backdrop of rising geopolitical tensions and the Russian-Ukraine conflict is no easy feat.

Huge investments have been made to bolster supply chain resilience, such as by tapping data analytics to make the process more efficient.

The chain also acquired a majority stake in a pork processor, OJJ Foods, in January 2022 to ensure consistency and security in pork supply, Mr Vipul said.

It is also expanding its supplier base for essential items such as eggs, cooking oil, and – most recently – milk.

Said Mr Vipul: “There are supplier relationships, alternative vendors, investments in the backend and storage facilities. It is a combination of all of these that results in a secure supply chain of food and essential items for the country.

“It’s like an ecosystem, rather than just looking for new suppliers.”

Apart from tackling these immediate challenges, Mr Vipul also has a long-term plan for the supermarket.

He wants to improve the shopping experience, such as by making it easier and more convenient for more people to use the FairPrice mobile application. Among its features, the app allows consumers to scan products and pay directly through the app, skipping long checkout queues.

The target is to grow the number of users from 700,000 currently to 1.8 million in the next few years. Currently, online sales make up about 10 per cent to 15 per cent of total FairPrice sales.

There are also plans to make investments in the group’s food services Kopitiam and FoodFare, to ensure these brands evolve with the times.

Heavenly Wang, a cafe under Kopitiam, has already embarked on this, with its Changi Airport Terminal 2 outlet using service delivery robots and self-ordering kiosks.

These are all steps to make FairPrice Group “the most admired retailer in Asia”, said Mr Vipul, adding that this is his long-term goal for the supermarket brand.

He said that to familiarise himself with the supermarket’s business operations, his first few months in the job were spent working five- to six-hour shifts in various roles in the supermarket: he has been a cashier, a grocery picker assembling online orders, a warehouse assistant, and a store staff in charge of replenishing stocks.

“If you look at the quality of our products and our services (compared with the other retailers in Asia), I think we can hold our ground… We want to be the most admired, not just in Singapore, but in Asia.”

About the FairPrice Group

FairPrice Group is a social enterprise under the NTUC Enterprise Co-operative, which includes other organisations such as NTUC First Campus, Income, and NTUC LearningHub.

The FairPrice Group was formed in 2019 and comprises the following four entities:

1. FairPrice, a supermarket chain. There are over 370 outlets in various formats islandwide. Here are some of them:

  • FairPrice Xtra hypermarkets stock an extended range of products and services, from groceries to apparel and electronics.
  • FairPrice Finest offers daily groceries and also has a more premium selection, such as organic products and deli food.
  • Finest Gourmet, currently at Balmoral Plaza in Bukit Timah, offers premium ingredients and speciality products such as premium meat cuts and exotic fruit and vegetables
  • FreshMart is a concept store in Ang Mo Kio selling mostly fresh fruit and vegetables, along with some frozen products
  • FairPrice, with more than 100 stores islandwide, sells daily essentials

2. NTUC FoodFare, which was formed in 1995, has a catering division and a food manufacturing division.

3. Kopitiam, acquired by NTUC Enterprise in 2018, has more than 100 outlets islandwide.

4. NTUC Link, a rewards programme formed in 1998, under which members earn and redeem points when they shop at selected stores.

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