7-Eleven
Convenient Store
7-Eleven
FAILED
in Indonesia
Analyzed by :
Tarina C. W. Agung
Yusman
Merinda
Executive summary
Company profile
Product
Case Highlighted
Andina Fasha
Lesson learned
Mariska
Source
Analysis Data
SWOT Analysis
Summary
7-Eleven
BACK THIS PROJECT
7-Eleven entered the Indonesian market in 2009 by PT. Modern International Tbk and with the concept of 'Food Store Destination. It opened its first store in Bulungan, Jakarta in 2009, and in 2011, 7-Eleven’s network quickly grew to 50 stores, and in the next 3 years, it nearly tripled its number of stores to 190. Indonesia has some typical characteristics not found in other markets. For a person, just hanging out and doing nothing is so rooted in Indonesian culture, the local language has a special word for it called “nongkrong”. Indonesia’s 7-Eleven includes all goods offered by local markets and street vendors. The shop is open 24 hours, has barrier-free parking, offers concerts and other leisure activities, is air-conditioned and, most importantly, has a wireless connection. This makes it worthwhile to stay open 24/7.
Executive summary
Company profile
Case highlighted
Analysis
7-Eleven
BACK THIS PROJECT
7-Eleven, Inc. (stylized as 7ᴇʟᴇᴠᴇn) is an American international chain of convenience stores, headquartered in Dallas, Texas. The chain was founded in 1927 as an ice house storefront in Dallas. It was named Tote'm Stores between 1928 and 1946. After 70% of the company was acquired by Japanese affiliate Ito-Yokado in 1991, it was reorganized as a wholly owned subsidiary of Seven-Eleven Japan Co., Ltd in 2005, and is now held by Chiyoda, Tokyo-based Seven & I Holdings Co., Ltd.
7-Eleven operates, franchises, and licenses 71,100 stores in 17 countries as of July 2020.
Executive summary
Analysis
Products
Product
Case highlighted
Company profile
Perks
BACK THIS PROJECT
The iconic products
have become a substantial part of American Culture from its well-known Big Gulp® Fountain soft drink and Big Bite® grill items To the Slurpee® beverage and its fresh- brewed coffee. Also, foodservice offerings bring guests a proprietary line of prepared-fresh-daily and daily delivered deli sandwiches, wraps, breakfast sandwiches, and a wide assortment of fruits, salads, and baked goods.
Analysis
Products
FAQs
Case highlighted
Executive summary
BACK THIS PROJECT
7-Eleven’s Indonesian rollout was run by a local operator, PT Modern Internasional Tbk (MDRN). Indonesia’s first 7-Eleven opened in 2009. The closure of all 7-Eleven outlets in Indonesia has been carried out on June 30, 2017.
Reason why 7-eleven not enough stay longer in Indonesia:
You can write a title hereUnclear business model. 7-Eleven is not firm in determining its business model between a cafe or convenience store. The innovation that 7-Eleven is trying to do in Indonesia, namely implementing a food store destination business model, has resulted in high costs per outlet
decrease in company sales from 2015, this is due to the behavior of consumers who use the facilities from 7-Eleven but spend little cost in shopping at the convenience store
04
01
02
The prohibition of the sale of alcoholic beverages in Indonesia.
cancellation of the acquisition that will be carried out by PT Charoen Pokphand Restu Indonesia.
05
the high level of competition due to the increasing number of competitors
03
Products
Summary
Analysis
Lesson learned
Analysis data
Case Highlighted
BACK THIS PROJECT
Write a description here
OPPORTUNITIES
STRENGTH
- Locations are allocated in densely populated areas
- Has advanced equipment
- Has strong brand
- Features local artists or live bands
- Located in commercial and office areas
- Has an innovative and varied product in the food and drinks
- Provide good service
- Make costumer feel comfort
THREATS
WEAKNESS
- Intense competition among other convenience
- Customer preffer cheaper price
- Consumers are dominated by teenagers
- Lack of hygiene
- parking area is very narrow
- Access roads are congested
Case Highlighted
Summary
Products
Lesson learned
Analysis data
SWOT Analysis
BACK THIS PROJECT
7-Eleven in Indonesia's launch strategy is also the same as that of the US. These stores are located in commercial and office areas, but not public transportation stations, because they are not considered premium locations. Utilizing its power 7-Eleven entered the Indonesian market in 2009 by PT. Modern International Tbk and with the concept of Food Store Destination. It opened its first store in Bulungan, Jakarta in 2009, and in 2011, 7-Eleven’s network quickly grew to 50 stores, and in the next 3 years, it nearly tripled its number of stores to 190. In 7-Eleven peak they have an increase of net sales by 24.5 percent to Rp971.7 billion from the previous year which was only Rp778.3 billion. However, 7-Eleven's decline began to occur in 2015, when 7-Eleven's total net sales fell to Rp.886.84 billion. For the first time, 7-Eleven has closed its outlets. That year, there were 20 outlets closed. While only 18 new outlets opened, the smallest number of additional outlets since 2011.
Finally on June 30, 2017, 7-Eleven officially disappeared from Indonesian market. PT Modern Sevel Indonesia, a subsidiary of PT Modern Internasional, Tbk. announced the closure of all their stores starting June 30, 2017. The reason is because they have limited resources to operate 7-Eleven outlets. The closing of these outlets is the aftermath of the cancellation of the company's purchase (acquisition) by PT Charoen Pokphand Restu Indonesia, the cancellation of this acquisition due to the difficulty of fulfilling the requirements given by Seven Eleven Inc.
Summary
lesson learned
Case highlighted
Analysis data
BACK THIS PROJECT
There are many factors cause this lack of operational costs. There are :
1. Regulation, especially regulations regarding company establishment. As is known, 7-Eleven combines the concept of a mini market with a fast food restaurant. 7-Eleven finally took a restaurant license, namely Perda DKI Jakarta Nomor 11 Tahun 2011, which in the end 7-Eleven was subject to a restaurant tax. This is done because 7-Eleven also sells fast food such as Slurpee, 7Fresh, and sandwiches. However, this permit is disputed by the Ministry of Trade.
3. Revenue, especially revenue from alcoholic beverage. Alcoholic beverage contribute 15-20% to revenue but Peraturan Menteri Perdagangan (Permendag) No. 06/M-DAG/PER/1/2015 prohibit the sale of alcoholic beverages. Indonesian majority religion is Islam, so they too prohibit the drinking of alcoholic drink.
4. Environment. The cost of strategic location is expensive and almost all 7-Eleven location is in strategic location. Indonesia society are not too busy so they chose to get a comfortable “Nongkrong” for a really long time with only a cup of drink.
2. Expense, especially maintenance and utility expense. Vast land , too many chairs, good air conditioning and well speed wifi make the expense bigger than revenue.
Case highlighted
Analysis
Summary
Analysis data
Lesson learned
BACK THIS PROJECT
There are many thing 7-Eleven can adopt to fix the problem.
Before jump in, 7-Eleven should conduct research related to the existing market in Indonesia first. With the majority population being Muslim, making the market in Indonesia a little different from abroad so it needs adjustments to the outlets that will be opened. Not only that, with the concept of providing alcoholic beverages at low prices to drink at the outlet location, it makes people think that the outlet is a bad outlet.
03
7-Eleven can expand market segmentation by providing household goods that are usually consumed by households, it is hoped that this expansion will have an impact on increasing buyers from the housewife group, thereby increasing the income of 7-Eleven.
01
7-Eleven need to know the regulation about their business plan. Their unique business plan in Indonesia backfire because clash of rule. 7-Eleven too can make outlet in public transportation stations. public transportation stations in Indonesia different with other developed country who have a good time management so if in other country it count as no premium location, but for 7-Eleven concept it is considered gold mine.
04
7-Eleven can save more space and costs that will be used to heat food because almost all daily necessities that are usually used by the community do not need to be heated like the fast food provided there.
02
Products
Case highlighted
Analysis
Lesson learned
Summary
Source
SOURCES
https://bouldergroup.com/media/pdf/7-Eleven-Oswego-IL-OM.pdf https://www.beritasatu.com/archive/439508/aturan-pemerintah-picu-7eleven-gulung-tikar
https://finance.detik.com/berita-ekonomi-bisnis/d-3543152/analisis-kejatuhan-bisnis-sevel-hingga-akhirnya-gulung-tikar https://www.businesstoday.in/magazine/lbs-case-study/london-business-school-case-study-on-7-eleven/story/194769.html https://asia.nikkei.com/Business/Why-7-Eleven-is-closing-in-Indonesia https://journal.untar.ac.id/index.php/prologia/article/view/1975 https://www.cnbc.com/2018/11/06/7-eleven-indonesia-retail-restaurants.html
https://id.wikipedia.org/wiki/7-Eleven https://yonulis.com/2019/09/01/7-eleven-tutup-karena-pelanggan-pesaing-perusahaan-dan-pemerintah/ https://yonulis.com/2019/09/01/7-eleven-mundur-dari-pasar-indonesia-why/amp/
7-ELEVEN IN INDONESIA
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Transcript
7-Eleven
Convenient Store
7-Eleven
FAILED
in Indonesia
Analyzed by :
Tarina C. W. Agung
Yusman
Merinda
Executive summary
Company profile
Product
Case Highlighted
Andina Fasha
Lesson learned
Mariska
Source
Analysis Data
SWOT Analysis
Summary
7-Eleven
BACK THIS PROJECT
7-Eleven entered the Indonesian market in 2009 by PT. Modern International Tbk and with the concept of 'Food Store Destination. It opened its first store in Bulungan, Jakarta in 2009, and in 2011, 7-Eleven’s network quickly grew to 50 stores, and in the next 3 years, it nearly tripled its number of stores to 190. Indonesia has some typical characteristics not found in other markets. For a person, just hanging out and doing nothing is so rooted in Indonesian culture, the local language has a special word for it called “nongkrong”. Indonesia’s 7-Eleven includes all goods offered by local markets and street vendors. The shop is open 24 hours, has barrier-free parking, offers concerts and other leisure activities, is air-conditioned and, most importantly, has a wireless connection. This makes it worthwhile to stay open 24/7.
Executive summary
Company profile
Case highlighted
Analysis
7-Eleven
BACK THIS PROJECT
7-Eleven, Inc. (stylized as 7ᴇʟᴇᴠᴇn) is an American international chain of convenience stores, headquartered in Dallas, Texas. The chain was founded in 1927 as an ice house storefront in Dallas. It was named Tote'm Stores between 1928 and 1946. After 70% of the company was acquired by Japanese affiliate Ito-Yokado in 1991, it was reorganized as a wholly owned subsidiary of Seven-Eleven Japan Co., Ltd in 2005, and is now held by Chiyoda, Tokyo-based Seven & I Holdings Co., Ltd. 7-Eleven operates, franchises, and licenses 71,100 stores in 17 countries as of July 2020.
Executive summary
Analysis
Products
Product
Case highlighted
Company profile
Perks
BACK THIS PROJECT
The iconic products
have become a substantial part of American Culture from its well-known Big Gulp® Fountain soft drink and Big Bite® grill items To the Slurpee® beverage and its fresh- brewed coffee. Also, foodservice offerings bring guests a proprietary line of prepared-fresh-daily and daily delivered deli sandwiches, wraps, breakfast sandwiches, and a wide assortment of fruits, salads, and baked goods.
Analysis
Products
FAQs
Case highlighted
Executive summary
BACK THIS PROJECT
7-Eleven’s Indonesian rollout was run by a local operator, PT Modern Internasional Tbk (MDRN). Indonesia’s first 7-Eleven opened in 2009. The closure of all 7-Eleven outlets in Indonesia has been carried out on June 30, 2017.
Reason why 7-eleven not enough stay longer in Indonesia:
You can write a title hereUnclear business model. 7-Eleven is not firm in determining its business model between a cafe or convenience store. The innovation that 7-Eleven is trying to do in Indonesia, namely implementing a food store destination business model, has resulted in high costs per outlet
decrease in company sales from 2015, this is due to the behavior of consumers who use the facilities from 7-Eleven but spend little cost in shopping at the convenience store
04
01
02
The prohibition of the sale of alcoholic beverages in Indonesia.
cancellation of the acquisition that will be carried out by PT Charoen Pokphand Restu Indonesia.
05
the high level of competition due to the increasing number of competitors
03
Products
Summary
Analysis
Lesson learned
Analysis data
Case Highlighted
BACK THIS PROJECT
Write a description here
OPPORTUNITIES
STRENGTH
THREATS
WEAKNESS
Case Highlighted
Summary
Products
Lesson learned
Analysis data
SWOT Analysis
BACK THIS PROJECT
7-Eleven in Indonesia's launch strategy is also the same as that of the US. These stores are located in commercial and office areas, but not public transportation stations, because they are not considered premium locations. Utilizing its power 7-Eleven entered the Indonesian market in 2009 by PT. Modern International Tbk and with the concept of Food Store Destination. It opened its first store in Bulungan, Jakarta in 2009, and in 2011, 7-Eleven’s network quickly grew to 50 stores, and in the next 3 years, it nearly tripled its number of stores to 190. In 7-Eleven peak they have an increase of net sales by 24.5 percent to Rp971.7 billion from the previous year which was only Rp778.3 billion. However, 7-Eleven's decline began to occur in 2015, when 7-Eleven's total net sales fell to Rp.886.84 billion. For the first time, 7-Eleven has closed its outlets. That year, there were 20 outlets closed. While only 18 new outlets opened, the smallest number of additional outlets since 2011. Finally on June 30, 2017, 7-Eleven officially disappeared from Indonesian market. PT Modern Sevel Indonesia, a subsidiary of PT Modern Internasional, Tbk. announced the closure of all their stores starting June 30, 2017. The reason is because they have limited resources to operate 7-Eleven outlets. The closing of these outlets is the aftermath of the cancellation of the company's purchase (acquisition) by PT Charoen Pokphand Restu Indonesia, the cancellation of this acquisition due to the difficulty of fulfilling the requirements given by Seven Eleven Inc.
Summary
lesson learned
Case highlighted
Analysis data
BACK THIS PROJECT
There are many factors cause this lack of operational costs. There are :
1. Regulation, especially regulations regarding company establishment. As is known, 7-Eleven combines the concept of a mini market with a fast food restaurant. 7-Eleven finally took a restaurant license, namely Perda DKI Jakarta Nomor 11 Tahun 2011, which in the end 7-Eleven was subject to a restaurant tax. This is done because 7-Eleven also sells fast food such as Slurpee, 7Fresh, and sandwiches. However, this permit is disputed by the Ministry of Trade.
3. Revenue, especially revenue from alcoholic beverage. Alcoholic beverage contribute 15-20% to revenue but Peraturan Menteri Perdagangan (Permendag) No. 06/M-DAG/PER/1/2015 prohibit the sale of alcoholic beverages. Indonesian majority religion is Islam, so they too prohibit the drinking of alcoholic drink.
4. Environment. The cost of strategic location is expensive and almost all 7-Eleven location is in strategic location. Indonesia society are not too busy so they chose to get a comfortable “Nongkrong” for a really long time with only a cup of drink.
2. Expense, especially maintenance and utility expense. Vast land , too many chairs, good air conditioning and well speed wifi make the expense bigger than revenue.
Case highlighted
Analysis
Summary
Analysis data
Lesson learned
BACK THIS PROJECT
There are many thing 7-Eleven can adopt to fix the problem.
Before jump in, 7-Eleven should conduct research related to the existing market in Indonesia first. With the majority population being Muslim, making the market in Indonesia a little different from abroad so it needs adjustments to the outlets that will be opened. Not only that, with the concept of providing alcoholic beverages at low prices to drink at the outlet location, it makes people think that the outlet is a bad outlet.
03
7-Eleven can expand market segmentation by providing household goods that are usually consumed by households, it is hoped that this expansion will have an impact on increasing buyers from the housewife group, thereby increasing the income of 7-Eleven.
01
7-Eleven need to know the regulation about their business plan. Their unique business plan in Indonesia backfire because clash of rule. 7-Eleven too can make outlet in public transportation stations. public transportation stations in Indonesia different with other developed country who have a good time management so if in other country it count as no premium location, but for 7-Eleven concept it is considered gold mine.
04
7-Eleven can save more space and costs that will be used to heat food because almost all daily necessities that are usually used by the community do not need to be heated like the fast food provided there.
02
Products
Case highlighted
Analysis
Lesson learned
Summary
Source
SOURCES
https://bouldergroup.com/media/pdf/7-Eleven-Oswego-IL-OM.pdf https://www.beritasatu.com/archive/439508/aturan-pemerintah-picu-7eleven-gulung-tikar https://finance.detik.com/berita-ekonomi-bisnis/d-3543152/analisis-kejatuhan-bisnis-sevel-hingga-akhirnya-gulung-tikar https://www.businesstoday.in/magazine/lbs-case-study/london-business-school-case-study-on-7-eleven/story/194769.html https://asia.nikkei.com/Business/Why-7-Eleven-is-closing-in-Indonesia https://journal.untar.ac.id/index.php/prologia/article/view/1975 https://www.cnbc.com/2018/11/06/7-eleven-indonesia-retail-restaurants.html https://id.wikipedia.org/wiki/7-Eleven https://yonulis.com/2019/09/01/7-eleven-tutup-karena-pelanggan-pesaing-perusahaan-dan-pemerintah/ https://yonulis.com/2019/09/01/7-eleven-mundur-dari-pasar-indonesia-why/amp/