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7-Eleven Builds a Niche in Indonesia With Fried Rice, Wi-Fi and Grooving

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to the warungs. "Now you can go to a clean, air-conditioned shop and it's a better experience."

To appeal to local tastes in Indonesia, the world's most populous Muslim country, 7-Eleven had to rethink its sales strategy.

The store offers ready-made fried rice, doughnuts and its signature Big Gulp soft drinks and flavored-ice Slurpees.

Most outlets also sell beer and wine coolers -- though each new shop conducts neighborhood surveys to get community approval first.

Meals can cost less than 23,000 rupiah, or about $2.50, which appeals to families that might once have gone to McDonald's, a close competitor.

Novi, a 37-year-old travel agent who, like many Indonesians, goes by only one name, said she liked the comfort of being indoors and the international food options. Her favorite is chicken katsu, a Japanese-style fried cutlet.

"There is a different kind of atmosphere, a different kind of food," she said, in comparing 7-Eleven with the food stalls she used to frequent. "There is air-conditioning here and there are no buskers to bother you," she said, referring to street performers.

The store's Big Bite hot dogs and cafe items -- coffee and cappuccino -- bring in the most sales. Small snacks like pillow bread, tiny sandwiches filled with cheese or chocolate, are also popular.

With 69 stores in Indonesia, all of them in Jakarta, 7-Eleven lags behind its closest competitors, including McDonald's, Dunkin' Donuts and KFC, which together have more than 600 outlets.

But 7-Eleven is expanding much faster, having added 36 stores last year alone. In Thailand, 7-Eleven has one store for every 10,000 people. If the same ratio were applied in Jakarta, Mr. Honoris said, the city could have 2,000 outlets.

The swift growth of the middle class shows the enormous potential for expansion.

From 2003 to 2010, about 50 million people entered the middle- income bracket, with disposable income of $2 to $20 a day, according to the World Bank. Indonesia's gross domestic product is more than $3,600 per capita, exceeding that of India, the second-largest consumer market in Asia, after China.

The success of 7-Eleven, which was acquired by a Japanese company in 1991, has drawn attention from foreign fast-food retailers and other convenience store chains, all eager to take advantage of Indonesia's seemingly insatiable consumption.

Lawson, a convenience-store chain based in Tokyo, which entered the country in July 2011, is on its way to opening 50 new stores by June. FamilyMart, also from Japan, announced in January that it would open 300 stores by 2015.

Local convenience stores are also expanding into special niches.

Bao Bao Express, a chain set up in 2010 by a local Chinese- Indonesian businessman, caters to office workers by offering a laundry service and allowing people to pay their electricity and water bills at the register. It operates in office buildings and apartment towers, a strategic move that keeps it from running up against a zoning restriction that prevents convenience stores from being too close to traditional markets.

For 7-Eleven, positioning itself as more of a hangout and less of a convenience store has made both its owners and its customers happy.

Rendie Sumadilaga, 26, said the store was even a decent place to meet girls. "There's lots of good eye candy," he said, nodding toward a nearby table. And that is just one of many factors Mr. Honoris is banking on.

"You can't find these kinds of customers in other countries," Mr. Honoris said. "This is what Jakarta needs now."



Source: (C) 2012 International Herald Tribune. via ProQuest Information and Learning Company; All Rights Reserved


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