Akhir Perjalanan 7-Eleven di Indonesia

Summary

In this interview, Roy, the Chairman of Aprindo (Indonesian Retailers Association), discusses the closure of 7-Eleven stores in Indonesia. He attributes the closure to both internal and external factors, such as high rent, economic downturns, and the inability to expand beyond Jakarta due to regulatory constraints. Despite these challenges, he emphasizes that 7-Eleven’s unique business model brought innovation to the market. Roy also highlights the broader struggles within the retail industry, urging for regulatory changes to better support business growth and expansion, while also focusing on sustaining consumer purchasing power and fostering a balanced retail ecosystem.

Takeaways

• 😀 The closure of 7-Eleven in Indonesia was due to both internal and external factors, including the global economic slowdown and rising operational costs.
• 😀 Internal factors, such as management restructuring and business model adjustments, can usually be managed, but external factors like economic downturns and increasing rent costs are harder to control.
• 😀 Retail businesses, especially those with international franchises like 7-Eleven, faced challenges due to rising rents after their lease agreements expired, which impacted profitability.
• 😀 One of the main reasons for 7-Eleven's downfall was the lack of expansion opportunities outside Jakarta due to regulatory restrictions on store permits in other cities.
• 😀 Regulatory challenges, including a lack of adaptive responses to business models like 7-Eleven’s, made it difficult for the company to grow beyond Jakarta.
• 😀 The retail industry, especially convenience stores, thrives on expansion. 7-Eleven was unable to expand to major cities in Indonesia due to restrictions in the law.
• 😀 The introduction of regulations preventing the sale of alcoholic beverages in mini-markets, which took effect in 2015, significantly hurt 7-Eleven's business performance.
• 😀 While the alcohol ban affected all mini-markets, it had a particularly large negative impact on 7-Eleven, as alcohol sales were a key revenue stream.
• 😀 Despite facing difficulties, the retail business is not entirely at fault. The issue lies in the changing consumer lifestyle and the need for businesses to adapt to these trends to stay competitive.
• 😀 The retail industry, including smaller mini-market franchises, faces a market where the competition is increasing, but there’s also a need for regulatory improvements to ensure fair competition and business growth.

Q & A

What is the main reason for 7-Eleven's closure in Indonesia according to Roy Mande?

Roy Mande attributes the closure of 7-Eleven in Indonesia primarily to external factors like economic downturns and the retail industry's underperformance. Additionally, rising rent costs due to lease expirations and regulatory constraints on expansion beyond Jakarta played a significant role.

How did the regulation affect 7-Eleven's expansion plans?

The regulation restricting mini-markets to local operators and limiting store locations to under 400 meters in certain areas hindered 7-Eleven's expansion plans. They were unable to open stores outside of Jakarta because of the local permits required and the inability to meet regulatory standards.

What role did rising rent prices play in 7-Eleven's struggles?

Rising rent prices, especially after the initial 5-year period of leasing prime locations, significantly impacted 7-Eleven's ability to remain profitable. As rent increased, their earnings decreased due to the underperformance of the retail sector, which made it difficult for them to cover the higher costs.

Why was 7-Eleven unable to expand to other cities in Indonesia?

7-Eleven faced restrictions due to a lack of permission to expand outside Jakarta. Their business model, focused on convenience and unique products, did not align with existing regulations that favored local businesses, preventing their growth into other major cities like Surabaya, Medan, or Makassar.

How did 7-Eleven's business model differ from other retail models in Indonesia?

7-Eleven introduced a unique business model by offering ready-to-eat food, beverages, and a comfortable space for customers to linger. This model was different from other mini-markets or hypermarkets, which typically focus on quick purchases rather than creating a social space for consumers.

What was the impact of the 2015 Permendak regulation on 7-Eleven’s sales?

The 2015 Permendak regulation, which prohibited mini-markets from selling alcohol, negatively affected 7-Eleven’s sales. Alcohol, particularly drinks under 1% alcohol content, contributed to a significant portion of their revenue, and the ban led to a decline in their overall sales performance.

How did the external economic environment contribute to 7-Eleven's struggles?

External economic factors, such as a slowdown in global economic growth and a decrease in Indonesia’s economic performance, affected the retail industry. This led to reduced consumer spending and lower sales for businesses like 7-Eleven, contributing to their financial challenges.

What is Aprindo's stance on the 7-Eleven closure?

Aprindo, the Indonesian Retail Entrepreneurs Association, expressed disappointment over the closure, as they believe the factors leading to it, such as regulatory challenges and external economic conditions, should have been addressed to prevent such outcomes.

What does Aprindo propose to avoid similar closures in the future?

Aprindo proposes that the government implement fair and balanced regulations, including revisions to the Perpres 36/2010, to support retail expansion and ensure the survival of businesses. They also emphasize the need for stimulus to boost consumer purchasing power and improve economic conditions.

What are the key issues Aprindo believes need to be addressed to improve the retail environment in Indonesia?

Aprindo highlights the need for more adaptive and responsive regulations, especially regarding retail expansion. They stress the importance of maintaining economic stability, supporting fair competition, and creating a conducive environment for modern retail to thrive. They also advocate for revising zoning regulations and providing necessary stimulus to boost consumer spending.