7-Eleven to Enter Market; Small Vendors Alarmed
The logo of yet another convenience-store chain will soon be strewn throughout Jakarta, with Dallas-based 7-Eleven, Inc., the world’s largest convenience store firm, announcing on Tuesday it plans to expand its ubiquitous franchise into Indonesia.
The entry of 7-Eleven, which has 36,000 existing stores worldwide, has been long in the planning. It sparked mixed reactions from business players here, with traditional market retailers worrying that its presence in Indonesia could drive out mom and pop traditional stores, which are already being affected by modern-style retailing.
In a press release issued on Tuesday, 7-Eleven said it would expand into the country through a franchise agreement with PT Modern Putraindonesia, a subsidiary of listed PT Modern Internasional Indonesia Tbk.
Indonesia will become the 12th Asian country where 7-Eleven, Inc. licenses or offers master franchises for the operation of its 7-Eleven stores. The others are the Philippines, Singapore, Malaysia, Japan, Australia, Taiwan, Macao, China, Korea, Hong Kong and Thailand.
PT Modern Putraindonesia plans to open its first 7-Eleven-branded outlets in Jakarta later this year, 7-11 said in the release.
PT Modern Putraindonesia is a retailer and manufacturer of photographic, electronic and telecommunications products with more than 1,000 outlets in the country. Its portfolio also includes Fuji Image Plaza, FujiFilm Digital Imaging, FujiFilm Image Service, Ricoh Copiers and MPhoto Studio.
Modern Putraindonesia said it planned to construct new 7-Eleven stores as well as converting some stores in its existing locations. The company’s goal is to focus on opening stores in Jakarta in its first years of operation, with plans to open in Bandung, Semarang and Surabaya, all on Java Island, in the longer term.
“The strength of our existing retail network, with its strategic locations on major roads, in bustling business districts and developed office and commercial areas, will play a major role in ensuring success of the new 7-Eleven stores,” said Henri Honoris, president director of
PT Modern Putraindonesia.
Tutum Rahanta, the secretary general of the Association of Indonesian Retailers, or Aprindo, said he had heard about 7-Eleven planning to enter Indonesia for about a year. Tutum said under Indonesian regulations, 7-Eleven was categorized as a minimarket retailer.
“Their presence will be good for competition and should be nothing to worry about,” he said.
His comments were echoed by Mudrajad Kuncoro, a retail analyst, who said the 7-Eleven plan would encourage local players to increase their performance and help spread modern minimarket services across the country.
“We only have two players in the sector, Alfamart and Indomaret. Given Indonesia’s big population, the competition among minimarkets is no longer balanced,” Mudrajad said by telephone on Tuesday.
Indomaret is the fourth largest retail player in the country with 1,800 outlets and Rp 3.035 billion ($267,080) of total sales in 2007, while Alfamart has 1,475 outlets and total sales of Rp 2.849 billion ($250, 712), according to Retail Asia Online data.
Meanwhile, Ngadiran, secretary general of the Indonesian Traditional Market Vendors Association, or APPSI, said it opposed the presence of 7-Eleven.
He claimed it was against a 2007 presidential decree - the so-called Negative Investment List - that prohibits foreign retailers with retail space of less than 1,500 square meters from operating in the country.
The entry of 7-Eleven, which has 36,000 existing stores worldwide, has been long in the planning. It sparked mixed reactions from business players here, with traditional market retailers worrying that its presence in Indonesia could drive out mom and pop traditional stores, which are already being affected by modern-style retailing.
In a press release issued on Tuesday, 7-Eleven said it would expand into the country through a franchise agreement with PT Modern Putraindonesia, a subsidiary of listed PT Modern Internasional Indonesia Tbk.
Indonesia will become the 12th Asian country where 7-Eleven, Inc. licenses or offers master franchises for the operation of its 7-Eleven stores. The others are the Philippines, Singapore, Malaysia, Japan, Australia, Taiwan, Macao, China, Korea, Hong Kong and Thailand.
PT Modern Putraindonesia plans to open its first 7-Eleven-branded outlets in Jakarta later this year, 7-11 said in the release.
PT Modern Putraindonesia is a retailer and manufacturer of photographic, electronic and telecommunications products with more than 1,000 outlets in the country. Its portfolio also includes Fuji Image Plaza, FujiFilm Digital Imaging, FujiFilm Image Service, Ricoh Copiers and MPhoto Studio.
Modern Putraindonesia said it planned to construct new 7-Eleven stores as well as converting some stores in its existing locations. The company’s goal is to focus on opening stores in Jakarta in its first years of operation, with plans to open in Bandung, Semarang and Surabaya, all on Java Island, in the longer term.
“The strength of our existing retail network, with its strategic locations on major roads, in bustling business districts and developed office and commercial areas, will play a major role in ensuring success of the new 7-Eleven stores,” said Henri Honoris, president director of
PT Modern Putraindonesia.
Tutum Rahanta, the secretary general of the Association of Indonesian Retailers, or Aprindo, said he had heard about 7-Eleven planning to enter Indonesia for about a year. Tutum said under Indonesian regulations, 7-Eleven was categorized as a minimarket retailer.
“Their presence will be good for competition and should be nothing to worry about,” he said.
His comments were echoed by Mudrajad Kuncoro, a retail analyst, who said the 7-Eleven plan would encourage local players to increase their performance and help spread modern minimarket services across the country.
“We only have two players in the sector, Alfamart and Indomaret. Given Indonesia’s big population, the competition among minimarkets is no longer balanced,” Mudrajad said by telephone on Tuesday.
Indomaret is the fourth largest retail player in the country with 1,800 outlets and Rp 3.035 billion ($267,080) of total sales in 2007, while Alfamart has 1,475 outlets and total sales of Rp 2.849 billion ($250, 712), according to Retail Asia Online data.
Meanwhile, Ngadiran, secretary general of the Indonesian Traditional Market Vendors Association, or APPSI, said it opposed the presence of 7-Eleven.
He claimed it was against a 2007 presidential decree - the so-called Negative Investment List - that prohibits foreign retailers with retail space of less than 1,500 square meters from operating in the country.