Gaia Series 32: "Open The Next Big Market" In Overseas
Japanese convenience store chain Lawson’s expansion into Indonesia and how it overcame challenges through innovative approaches such as micro-outlets and a moving store are highlighted this week.
This week, the spotlight is on Lawson, a renowned convenience store chain in Japan. It has about 15,000 stores in Japan. In August 2023, it opened a store in the untrodden territory of Wakkanai City, Hokkaido. Known for its tough climate, the city became the home to Lawson's northernmost store in Japan. Since the opening of the Lawson Wakkanai Fukuko Street Store, Lawson has opened four stores in Wakkanai City, with a positive response from the local population.
With the domestic convenience store market reaching a crossroads in terms of developing new stores, Lawson set its sights overseas. The company identified Indonesia as a major Asian market with a huge growth potential. Lawson had entered the Indonesian market in 2011 and as of the end of 2022, it had less than 200 stores. In August 2023, Lawson's CEO, Sadanobu Takemasu, unveiled the company's bold plans to open 1,000 stores in Indonesia within a year.
Lawson faced many challenges in Indonesia, including the impact of the COVID-19 pandemic, cultural differences and competition from local convenience store giants such as Indomaret and FamilyMart. Despite these hurdles, Lawson's Asia-Pacific Company, led by Takuya Sato, worked tirelessly towards the ambitious goal of expanding the store count in Indonesia. Takuya Sato from Lawson Asia-Pacific Company was tasked with looking for new sites and locations to open stores. He scoured various areas in Jakarta with his colleague Mr Eko every day. As a result of their hard work and perseverance in talking to property owners and negotiating the rent, a few new Lawson stores were launched. They include a Lawson store which opened in May 2023 in the suburbs of Jakarta in a luxury residential district facing a park, and another store which took over a site formerly occupied by 7-Eleven and opened in November 2023.
The layout of Lawson stores in Indonesia has been adapted to accommodate local preferences. The stores include in-store eating spaces next to the counter. In Indonesian culture, there is a tradition of buying food from stalls. The stalls feature a range of local foods made with regional ingredients. Lawson promoted oden, a dish from Japan, in Indonesia and it was sold next to the till as odeng. Mashed-up fish meat is stretched out, skewered and doused in spicy sauce to suit the locals’ tastebuds. The stores also have rice balls, a symbol of Japanese convenience stores, featuring local flavours like tuna or spicy chicken.
A factory outside central Jakarta prepares the local food products sold at Lawson. These include sandwiches, chicken cutlets, rice balls and chicken mayo lunches. They are all delivered to the Lawson stores daily.
Foreign convenience stores cannot open new stores in Indonesia on their own, so Lawson entered into a partnership with the Alfa Group. Alfamart is now an affiliate company of Lawson and has about 20,000 stores across Indonesia. To achieve the ambitious goal of opening 1,000 stores in Indonesia, Lawson has employed innovative strategies such as opening small-scale micro-outlets within local supermarkets like Alfamidi and malls. These micro-outlets are designed to sell popular items like odeng and fried food. Lawson even introduced a moving store with an electric car to increase awareness of the Lawson brand. The mobile store parks outside offices and schools and sells popular Lawson products like rice balls, desserts and odeng. These moving stores have been on the road since October 2023. Such initiatives aim to reach diverse consumer segments and solidify Lawson's presence in the Indonesian market.
Mr Sato also visited Cilegon, the northernmost point on the island of Java. There is a ferry linking the islands of Sumatra and Java. Lawson is currently only found on Java, but the company aims to include other large islands such as Sumatra in its expansion plans also.
Lawson's expansion journey in Indonesia highlights the challenges associated with expanding into a diverse and dynamic market. As the company continues to innovate, adapt and establish its presence, the convenience store giant has demonstrated its commitment to global expansion and providing diverse communities with a taste of Japanese convenience.
Tips:
1) Lawson's expansion into Indonesia highlights the importance of adapting to local preferences
2) Forming strategic alliances with established local players can help you gain a foothold in foreign markets
