retail franchises

Dissecting The Demise Of 7-Eleven In Indonesia

The debate over the cause of the sudden departure in late June of 7-Eleven, known locally as Sevel, from Indonesia continues with business leaders pointing fingers at anti-alcohol laws and a creative business model.

Haryadi Sukamdani, Chairman of the Indonesian Employers Association (Apindo), said the combination of the ban on alcohol sales and 7-Eleven’s innovative in-store approach led to the iconic brand’s demise in Indonesia.

“Originally, 7-Eleven presented a lifestyle that youths could get together there to hang out. The banning of alcoholic beverage sales caused a drop and since then 7-Eleven lost one of its competitive advantages,” he said.

The business leader predicted the closure of the chain would not have a significant impact on the economy due to the smaller workforce, particularly compared to competitors Alfamart or Indomaret.

Minister of Industry of Airlangga Hartarto, meanwhile, denies the alcohol ban had any impact on the closure.

Coordinating Minister for Economic Affairs Darmin Nasution said Indonesia’s retail business growth is among the fastest in the world and so the government is looking to develop further regulations for the mini-market industry.

“We will not hamper the development of retail business, but we will make standard rules,” he said, shortly after the 7-Eleven announcement in late-June.

Nasution pointed to draft regulations introduced earlier this year which is aimed at protecting traditional markets, as well as small and medium businesses.

The government is looking to clear up rules on ownership and investors, as well as zoning concerns.

Ministry data shows 35 percent of mini-marts are owned by franchisees, with the remaining 65 percent operated in-house.

See: The Challenges For Global Retail Franchises In Indonesia

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Shannon Claudia is an aspiring writer and self-proclaimed poet residing in Indonesia's most sought melting pot - Jakarta. See her portfolio at https://shannonclaudia.wixsite.com/scrs17


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