Grocery Mart's Sales Increase Fivefold in 6 Years... Threatening Local Small Businesses

Choi Seungjae, People Power Party Lawmaker, Analysis Report Submitted by Korea Distribution Science Association

On the 18th, when the number of confirmed cases of the novel coronavirus infection has remained in the 100s for 16 consecutive days, Namdaemun Market in Jung-gu, Seoul, is showing a quiet scene. Photo by Jinhyung Kang aymsdream@

[Asia Economy Reporter Lim Hye-seon] An analysis has emerged that grocery marts are threatening traditional markets and neighborhood commercial districts.

According to survey analysis data submitted by the Korea Distribution Science Association to People Power Party lawmaker Choi Seung-jae on the 21st, the number of medium-sized supermarkets, so-called 'Sikjajae Mart' (with sales of 5 to 10 billion KRW), increased by 72.6% last year compared to 2014. The sales proportion also increased by 36.5%. Although the proportion of Sikjajae Marts with sales exceeding 10 billion KRW was only 0.5% as of last year, their sales share accounted for about 24.1% of the total, encroaching on the market. While the number of supermarkets has been declining since 2016 due to the closure of small supermarkets, Sikjajae Marts with sales over 10 billion KRW have been thriving and continuously growing.

According to the Distribution Industry Development Act, strengthened since 2010, a 1 km radius around traditional markets is designated as a traditional commercial preservation zone, and large marts and corporate supermarkets (SSMs) with an area of 3,000㎡ or more are prohibited from opening new stores. Additionally, business hours are restricted, including mandatory closure twice a month.

However, Sikjajae Marts, with an area of less than 3,000㎡, have rapidly grown like mushrooms after rain, encroaching on traditional markets and neighborhood commercial districts.

Earlier in August, at a meeting of the Gyeongbuk Merchants Association, which includes 84 traditional markets as members, criticism of Sikjajae Marts continued.

They unanimously emphasized that Sikjajae Marts should also be subject to business regulations comparable to large marts, such as twice-monthly closures, business hour restrictions, and product limitations.

According to data from the Financial Supervisory Service, Jangbogo Sikjajae Mart operated 13 directly managed stores and recorded sales of 316.4 billion KRW last year, more than doubling from 157.6 billion KRW in 2013 over six years. Woori Mart surged more than fivefold from 37 billion KRW to 196.4 billion KRW. One Plus Mart increased from 40.3 billion KRW to 174.9 billion KRW.

Despite continuous opposition from related industries, measures have been sluggish. The Supermarket Cooperative Federation and the National Merchants Association raised issues regarding Sikjajae Marts in a meeting with lawmaker Choi Seung-jae earlier this month and urged the National Assembly to prepare countermeasures.

Lawmaker Choi Seung-jae stated, "There are constant voices from related industries that conflicts frequently occur between traditional markets and neighborhood commercial districts wherever Sikjajae Marts open new stores," adding, "As it has been 10 years since the enforcement of the Distribution Industry Development Act, it is urgent to change policies that fit the changing distribution industry environment by strengthening necessary regulations and improving unreasonable ones."

This content was produced with the assistance of AI translation services.