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Fairprice changed its business model

I became a shareholder of Fairprice 40 years ago and invested a modest sum (maybe $1,000) in its shares.

Fairprice offered low prices and have a convenient network of stores all over Singapore. Fairprice distributes a large part of their profits to their shareholders each year as a rebate on their purchases.

In most years, the rebate was 6%.

Many shareholders of Fairprice, who were mostly members of NTUC affiliated unions, liked the business strategy of the cooperative, i.e. low prices and good rebates.

The business strategy of Fairprice changed over the years. The prices at their supermarket increased and became more expensive than other supermarkets. New supermarket chains started to offer more competitive prices.

Fairprice invested heavily in technology, but they did not appear to bring down prices through higher productivity. It seemed that their heavy investments added to their operating expenses.

Fairprice launched the Link loyalty program, which brings in Fairprice and other partners. Fairprice reduced its rebate t0 4% (from 6%) to offset the benefit provided to members under the Link points (which was estimated to be worth 2%). The Links loyalty program was expensive to manage and adds to the high operating expenses.

The Link loyalty program appeared to be largely driven by Fairprice, as contribution from other partners was small. As Fairprice already had a rebate program, the Link program was a duplication.

Fairprice joined with OCBC Bank to issue a credit card in 2007. That was 15 years ago. They have now ended this partnership.

Fairprice now partners with Standard Chartered Bank to set up a digital bank, called Trust Bank.

I prefer the original model of Fairprice, i.e. low prices and good rebates.

The new business model of Fairprice is quite different. I will stop shopping in Fairprice. I will not open an account with Trust Bank (as I have too many bank accounts only).

 

Tan Kin Lian

 

 

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READER COMMENTS BELOW

13 Responses to “Fairprice changed its business model”

  • idontbelieveinccpbs:

    Fairprice, same as SP as NTUC are GLCs, they follow PAPPY model of maximum profit at minimum cost, squeezing suppliers but selling sky.

    Singapore GLCs are maximising profit at expense of citizens, this model has been there for decades.

    HDB selling BTO near million is another example.
    SP Utility Rate are sky also.
    Petrol rate also sky.
    COE also sky.

    Everything under PAPPY is sky isnt it?

    What can you do except VTO?

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  • Harder Truths:

    Fakeprice is a scam. Go somewhere else for better goods and services.

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  • xoxo:

    FAIRprice has become FATprice n raking in tons of profit$ from mostly ordinary n poor sgs who are the main customers as more atas shoppers prefer Cold Storage n Jason’s.

    NTUC FAIRPRICE shud report its annual profits more transparently.
    Co-op?
    More like PROFITS BEFORE *members*.
    Just give peanut rebates to cover up.
    NTUC FAT-PRICE IS NO MORE CHEAPER,sometimes prices are even higher?

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  • State-owned enterprise problem:

    Fairprice like all state-owned enterprises in Singapore earning profit at the expense of poor but pay very little to their low ranking employee. If you compare the price of grocery in Fairprice to wet market, you will know how high the price of grocery in Fairprice. They earn so much and they employ cheap Malaysian employee. So where is the money? Now we know shareholder get the money, CEO get the money and the money is invested to set up a digital bank,Trust Bank to promote government digital plans. Is this right? Fairprice primary business aim is to serve Singaporeans as state-owned enterprise, now it become a business who profit at the expense of poor people. It is not right to use money to invest in digital bank when poor people are suffering from inflation,these money earned should be use to reduce price of products and discount. State-owned enterprises which use taxpayers’ money and may or have use bailout fund from taxpayer have no moral right to profit from Singaporeans. I feel Fairprice and all state-owned enterprise should be social enterprise. Its account should be open and be scrutinize by Singaporeans.

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  • Please Rename:

    Its time they should rename the company as UNFAIR PRICE. I too will stop shopping with them.

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  • SINGAROAR:

    The PAP govt.is constantly talking about new technology usage . Ultimately the question is, are profits increasing or are costs increasing because of new technology? As we are the ATMs of the govt.,we will continue to absorb the State ‘s losses as our govt. continues to spend on new technology.

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  • idontbelieveinccpbs:

    Every GLC is trying to maximise profit at expense of citizens.
    Every govt entity is also trying to maximise profit at expense of citizens.

    TKL is complaining just about Fairprice
    What about SP?
    What about HDB?
    What about LTA?
    What about URA?

    So many under the umbrella of this very greedy leadership, what can you do?

    Complain and complain and hope it change?

    The only way things can change is when they are not in power or they lost big on election, otherwise things will go worst and worst.

    VTO 2025

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  • Fair Price ?:

    Fair price should bring down the price, especially the essential goods.
    Should be more of a social enterprise than operate like a private business.
    Not much help to keep the COL from going up…

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  • Relax:

    From the consumer’s point of view, I see it as a legally sharing of database or widening of customer pool for the two business partners. Do consumers benefit?
    I have seen some people with a wallet full of cards but come to payment, they are not aware which card can be used and when to use unless cashier asked them. There are too many discount/reward/membership cards in the markets, unless we are smart consumers and know how to tap on the benefits, or else they are just a collection.
    Mr Tan, I agreed with you to have low prices and good rebates.
    Live without cards, why make our lives so complicated.

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  • NotMyProblem:

    NTUC workers’ Unions and Fairprice are holding stables for army Generals. When the time comes they will be placed for General election.

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  • stupid citizens vote pap:

    NotMyProblem:
    NTUC workers’ Unions and Fairprice are holding stables for army Generals. When the time comes they will be placed for General election.

    Very well said.

    pap will be replaced.

    2022 is a bad year. Yet, pap will raise GST in 2023 and 2024.

    If pap wins GE2024, then, we have many stupid citizens in Singapore.

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  • NotMyProblem:

    “If pap wins GE2024, then, we have many stupid citizens in Singapore.”

    There are 2 reasons for PAP to win. One stupidity has no cure. There is cure for cancer and Covid-19, but not stupidity.

    Two, SG population consists of more than 40% new citizen and all are of voting age.

    No one can help SG, except Singaporeans!

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  • Not fairprice:

    Harder Truths:
    Fakeprice is a scam. Go somewhere else for better goods and services.

    It is no longer fairprice. Found that its prices are higher then Giant and even Sheng Siong. I have since stopped buying from NTUC except when there are promo. But Trust, just take advantage of the evoucher and then close off later.

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