Why 7-Eleven Brand Expansion in Indonesia Failed
One of the world’s largest retail businesses, 7-Eleven, entered the Indonesian market in 2010, launching with 21 branches and peaking at 190 locations by 2014. However, this rapid growth quickly unraveled, and by 2015, the business faced significant challenges.
Following the government’s restrictions on alcohol sales, 7-Eleven experienced a substantial drop in revenue, with sales declining by 15-20%. In addition, intense competition from major local retailers, combined with a downturn in the consumer economy, contributed to the failed expansion. Interestingly, the issue was tied to ineffective brand localization.
What is brand localization?
Simply put, brand localization is a process of adapting visuals, brand messaging and overall experiences to suit the audience in a specific location or market. Just think about it—each country has its own unique characteristics, from language to cultural norms and preferences. Can a single strategy work across different cultures? This is a major obstacle for global brands aiming to expand, making localization a critical component of any international growth strategy.
What does this have to do with 7-Eleven?
In many countries where 7-Eleven has thrived, alcohol consumption is a common cultural practice, and this was true when the chain first entered Indonesia. However, issues arose when Indonesia, where most people follow beliefs that forbid alcohol, implemented regulations restricting its sale in retail stores and supermarkets. This ultimately had an impact on sales, causing a drastic decline.
More than just language localization
Different cultural and demographic aspects make product localization important, adjusting to the standards and conditions of the country you are targeting. If you want to develop your brand in the international market, pay attention to the following localization aspects:
- Language: Don’t just translate. Using idioms, slang, and speaking styles that are adapted to local culture makes the brand closer and easier to understand by the audience
- Culture: Find out more about the cultural values that influence the target audience or customer to buy your product or use your services. Some cultural values that you need to adjust include traditions, local beliefs, holidays and local norms
- Demographic segmentation: Create specific demographic segmentation, such as age, gender, occupation, education, income and location. Imagine selling winter products in a country that doesn’t have winter, is it suitable? Not suitable, right?
A successful localization strategy for your brand will lead to:
- Elevated brand awareness
- Deeper customer engagement
- Increased sales
- Targeted customer support
Want to localize, where to start?
- Understand the character of the local community.
Stereotypes can be misleading, find out about how the local community behaves and believes directly, and find out why. Take 7-Eleven as an example: a significant portion of the Indonesian population chooses not to consume alcohol because of their religious convictions.
2. How are their interpersonal relationships?
Find out about individual relationships with family, coworkers, or the social environment of the community. In Indonesia, for instance, students often gather in public spaces to use the internet during their downtime. To cater to this trend, 7-Eleven has created an inviting atmosphere by offering free seating and internet access.
3. What is local community communication like?
The use of language is a major aspect in this case. Adjust your content and brand marketing approaches to resonate with the language and current trends of the local community. The easier it is to understand and relate, the better.
4. Competitor analysis.
Identify your brand’s local competitors and analyze the advantages and disadvantages that set your brand apart. Learn from the case of 7-Eleven, which lost ground to local retailers that offered local products at more competitive prices.
5. Localization without local people is impossible!
Connecting with local experts living and working in your target market is vital. Remember, locals’ firsthand knowledge of effective practices can help you navigate challenges and avoid common errors
6. Don’t forget about local policies
Different countries have different regulations. Pay more attention to this!
Need local professionals to help you expand your business in Indonesia? Let us help you. Sit and talk with us for more comprehensive brand localization you need.
Reference:
https://www.youtube.com/watch?v=tfGUJowHOPM
https://lokalise.com/blog/brand-localization/
https://www.thebrandingjournal.com/2024/07/importance-brand-localization/