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Jakarta Post

7-Eleven loses steam due to alcohol ban, tight margin: Business group

  • Grace D. Amianti

    The Jakarta Post

Jakarta   /   Mon, June 26, 2017   /   06:36 pm
7-Eleven loses steam due to alcohol ban, tight margin: Business group A man shops at a 7-Eleven outlet in Jakarta. (Antara/Reno Esnir)

The alcohol sales ban at minimarkets and a low profit margin are likely the main causes behind the planned permanent closure of 7-Eleven convenience stores in Indonesia, a business group leader has said.

Publicly listed PT Modern Internasional, the operator of 7-Eleven convenience stores in the country, has recently announced that it would close down all of its outlets starting on June 30 after a major potential investor decided to drop plans to acquire the company’s retail business.

“I heard that the alcohol ban has contributed to the drop [in sales] as they started to lose one of their competitive advantages compared to other [convenience stores],” Indonesian Employers Association (Apindo) chairman Hariyadi Sukamdani said on Monday.

He said that the retail business was very tight in terms of competition and had a rather slight margin, although 7-Eleven had a “good” initial concept by providing space for visitors to gather, just like cafes or restaurants.

Earlier this month, Modern Internasional announced that an anticipated deal worth Rp 1 trillion (US$75.08 million) between its subsidiary PT Modern Sevel Indonesia and PT Charoen Pokphand Restu Indonesia (CPRI) – part of publicly listed poultry firm PT Charoen Pokphand Indonesia – had been canceled.

Alcohol contributed roughly 10 percent to the total sales of 7-Eleven stores, Modern Internasional director Henri Honoris once said.

He considered the alcohol sale ban as detrimental to business and has been forced to close down 25 underperforming 7-Eleven stores this year alone. (tas)