Monday, May 28, 2012

7-Eleven Finds a Niche by Adapting to Indonesian Ways

From the NYT:
7-Eleven Finds a Niche by Adapting to Indonesian Ways
http://www.nytimes.com/2012/05/29/business/global/29iht-stores29.html?pagewanted=1&_r=1&ref=business

The article looks at 7-Eleven's strategy in Indonesia to cater to a younger demographic as it adapts to that country's culture (it's love for social networking, a country where hanging and doing nothing has its own word, "nongkrong") and meets it's specific needs (a space where one can surf the net 24/7, a space for socializing). The strategy has proven succuessful in a country where more and more Indonesians have access to disposable income, which in turn creates a desire for "affordable luxury", as the article describes 7-Eleven's appeal to the noveau rich and a growing middle class.

I connected the NYT piece with the assigned article, "Reinventing Your Business Model". 7-Eleven, in order to be successful in Indonesia, needed to redefine itself to successfully meet the needs of customers with a different profile than those it is accustomed to serve in the US. Rather than a complete reinvention, it adaptated to its unique environment, at its core remaining a convenience store, albeit one with a different strategy for success.

The customer value proposition can be read in the strategic statement, as quoted by the NYT article:
"To blend a small supermarket with inexpensive ready-made food and seating, which attracts customers in a city desperately lacking outdoor recreation space and snarled by traffic jams that often restrict mobility". Indonesian 7-Elevens have become spaces for concerts, for meeting and socializing with friends, for surfing the net 24/7. The strategy works because these services and features are hard to find elsewhere in a crowded city, and the international brand is attractive to a middle class that craves international experiences, that sees in the logo a specifically American experience. Attempting a similar strategy in the US would not work given that the needs are not the same (ie. generally more space in American cities, greater internet access), the brand name carries different connotations (strictly a convenience store, not for hanging out, not as attractive/"cool" to the middle class), and coffee shops currently take on this role.

7-Eleven clearly had the key resources and processes to implement its Indonesian business model. The internationally recognized brand was used as a starting point to meet the specific needs of its young, Indonesian target-market. Could this business model be reappropriated stateside? Could 7-Elevens in the US become the country's new coffee shops, hip urban spaces for hanging out? What changes to the current Indonesian strategy would have to be made in order for the brand to take on a new image in the US? In other words, how are the needs of under 30 youth different in the US than in Indonesia?       

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