(Source: IGD Retail Analysis| June 30, 2017)
Modern Sevel, the operator and franchise holder of the 7-Eleven convenience stores in Indonesia, has closed all of its stores across the country.
In 2015, the company wanted to use the franchise as a growth engine to reach more than ten times their current network to 2,500 stores by 2025. However, they have struggled to maintain profitability and found it difficult to compete with the two leading local operators, Alfamart and Indomaret, operating over 13,000 stores each.
Earlier this month, Modern Sevel had failed to reach an agreement to sell operations to Charoen Pokphand Indonesia, affiliate of CP All. The director of Modern International, Chandra Wijaya, said the decision to cease 7-Eleven operations in Indonesia was due to the company’s inability to pull in resource to support the mounting and continuing losses of the 7-Eleven stores.
It is has been unprecedented for 7-Eleven to withdraw from a country in the manner that it has, and with such short notice. Despite 7-Eleven’s wide-spread coverage at home and overseas, this is a reminder that Seven & i’s franchising strategy can be fragile, and can reduce effectiveness of brand and operational execution.
In May, FamilyMart UNY announced that they would review their operations in Indonesia in search of profitability. It will be interesting to see how 7-Eleven’s other competitors react to this latest announcement.
Read More: https://retailanalysis.igd.com/news/news-article/t/all-7-eleven-stores-in-indonesia-withdrawn/i/17077?utm_campaign=833180_170707.RA.NL.OPEN&utm_medium=DMemail&utm_source=IGD%20Services%20Limited&dm_i=2Z8W,HUVW,4VEADL,1UY0S,1