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

Jakarta Post - June 26, 2017

Grace D. Amianti, Jakarta 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)

Source: http://www.thejakartapost.com/news/2017/06/26/7-eleven-loses-steam-due-to-alcohol-ban-tight-margin-business-group.html.

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