Will NTUC FairPrice’s Warehouse Club retail format work?

At  a time retail businesses struggle to find their footing, NTUC FairPrice is debuting a new members-only format in Singapore. Early this week, NTUC FairPrice launched its Warehouse Club, closely following the model of Costco.

In a market where rents easily eat into profits, retail businesses are looking to find the right balance. In 2012, hypermarket Carrefour found itself having to bow out of the Singapore market. (Read also: Carrefour: What went wrong?). The recent years have also seen players like RedMart, an online grocery service debut in an attempt to penetrate the market and yet beat rental costs.

Marketing spoke to FairPrice on its expectations for its new format.

“As a co-operative, one of FairPrice’s objectives is to help moderate the cost of living in Singapore and we have remained committed to this social mission. At the same time, we recognise that consumers have changing needs and we have strived to keep pace with this by catering to different segments of society across all ages through our multiple retail formats,” said a spokesperson.

She said that the new format is not expected to cannibalise its current businesses. “We believe that the needs of customers who visit Warehouse Club would be different from those who shop at the supermarkets. For example, these would be customers who see the benefit of purchasing in large quantities or are interested in some of the exclusive products available at the Warehouse Club. Those who need their daily groceries will continue to shop at FairPrice supermarkets for their individual needs,” she said.

The primary focus for NTUC FairPrice will continue to be its supermarket and hypermarket stores.

NTUC FairPrice has set up multiple retail formats, with 125 FairPrice supermarkets, FairPrice Finest, and FairPrice Xtra outlets.

Gerry Lee, deputy CEO (Operations), NTUC FairPrice, said: “The warehouse club concept has been a growing success overseas where shoppers enjoy very deep discounts by buying in large quantities.”

The Warehouse Club will span over 80,000 square feet with a product range of 4,000 items at the FairPrice hub at Joo Koon Circle. Following in the footsteps of the likes of Costco, it is opening up membership prices at SG$35 a year for its current union members and $SG50 for non-union members.

According to FairPrice, it has already amassed close to 12,000 members. These members will get up to 20% savings on a range of groceries and general merchandise.  The store will include exclusive brands as well.

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