7-Eleven Finds a Niche by Adapting to Indonesian Ways

The nightspot has live bands, Wi-Fi and a growing clientele.

It also has a familiar green-and-orange sign hanging overhead: 7-Eleven.

“It’s a new concept of hanging out,” said Oka Dharmawan, 21, an engineering student who meets friends at 7-Eleven almost every night to log onto the wireless hot spot and drink Slurpees.

Ten years ago, young people in Indonesia gathered at street-side food stalls called warung to hang out and gossip. But with rapid economic growth has come social change.

“People still like to talk about their lives, they like to gossip,” said Henri Honoris, president director of Modern Putra, 7-Eleven’s Indonesian franchisee. “Now we give them an alternative. It’s a warung with better quality.”

The franchise’s strategy has been 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.

“The neighborhood 7-Eleven has become recreational,” said Debnath Guharoy, Asia director for Roy Morgan Research, a market research company based in Australia.

Sixty-five percent of the franchise’s customers are younger than 30, and to reach them, it relies on another defining feature in Indonesia: a love of social networking. In one of the world’s most plugged-in countries, 7-Eleven has 57,000 Twitter followers and more than 44,000 Facebook fans.

Many of them spend hours surfing the Internet at 7-Eleven, which never closes, allowing young people to gather late into the night. When the store plays host to local bands, customers update their social networking statuses and help draw bigger crowds.

And now that many Indonesians have more disposable income, they are looking for what Mr. Honoris calls “affordable luxury.” The store’s appeal to both the lower middle class and the nouveau riche becomes apparent to anyone just looking at the parking lot, where motorbikes sit next to Mercedes-Benzes.

In many ways, the convenience store’s evolution was a given in a country like Indonesia, where the penchant for hanging out runs so deep that there is a word for sitting, talking and generally doing nothing: nongkrong.

Mr. Honoris said that he had seen the demand for a revamped 7-Eleven early on, but that it had taken two years to persuade the company, which has its headquarters in Dallas, to grant him the franchise.

When 7-Eleven finally opened its first 20 Indonesian stores in 2009, its first expansion into a new country in 16 years, he found his knowledge of the market paid off.

Since then, Modern Putra, which is also the national distributor for Fujifilm, has seen its sales jump fivefold, reaching 320 billion rupiah, or about $35 million, in 2011. The company recorded a net profit of 57 billion rupiah last year.

“Before you had a dirty, sweaty little street shop, and that’s all there was,” said Mr. Guharoy of Roy Morgan Research, referring to the warungs. “Now you can go to a clean, air-conditioned shop and it’s a better experience.”

To appeal to local tastes in the world’s most populous Muslim country, 7-Eleven had to rethink its sales strategy.

The store offers ready-made fried rice, doughnuts and its signature Big Gulp soft drinks and flavored-ice Slurpees. Most outlets also sell beer and wine coolers — though each new shop conducts neighborhood surveys to get community approval first.

Meals can cost less than 23,000 rupiah, which appeals to families that might once have gone to McDonald’s, a close competitor. Novi, a 37-year-old travel agent who, like many Indonesians, goes by only one name, said she liked the comfort of being indoors and the international food options. Her favorite is chicken katsu, a Japanese-style fried cutlet.