The minimarket 7-Eleven is closing down, and according to the Indonesian Entrepreneur Association (APINDO), the main reason may have been the ban on alcoholic beverages.
The ban is listed in the Ministry of Trade regulation no.6, 2015 regarding the Control and Supervision of Distributing and Selling Alcoholic Beverages. “I don’t know why precisely but I’ve heard it was because of the drop in the sales of alcohol beverage,” said Hariyadi Sukamdani, Head of APINDO. “The drop caused them to lose one of their competitive advantages.”
Moreover, he added the closure was also due to lack of anticipation from the management in dealing with competitors. “Just take a look at [similar minimarket competitors] Indomaret and Alfamart that are concentrated in several areas,” he said. “Or Circle K who has a strong presence in Bali because they target mostly tourists. This has caused 7-Eleven to be unable to sustain themselves financially.”
Nevertheless, as reported by Kompas, there will be no significant impact on the Indonesian economy from the brand’s demise. “The impact is small. We might have a problem if Alfamart and Indomaret closed down because they have many employees.”
Meanwhile, the head of the Indonesian Chamber of Commerce and Industry, Rosan P Roeslani, stated that from the start 7-Eleven had the wrong business model which produces a small financial return. He argued that despite providing chairs and tables so that people can hang out, the reality is their consumers don’t spend much.
“They rented this huge space but it’s mostly used for young people to hangout,” Roeslani said yesterday, as quoted by Republika. “They buy one Coca-Cola but stay for two to three hours. Compare that to Indomaret or Alfamart where they have a smaller space but people actually come in and shop.”
PT Modern International Tbk (through their subsidiary, PT Modern Sevel Indonesia) announced the closure of all 7-Eleven outlets effective on June 30, and the official release stated that the reason was because of the failure to reach an agreement with PT Charoen Phokphand Restu Indonesia who was going to buy the franchise.