[Inside Chodong] The Choice Belongs to Consumers

During the period when large discount stores and Super Supermarkets (SSMs) were rapidly increasing, the government introduced a mandatory twice-a-month closure for large discount stores to protect neighborhood businesses and traditional markets. While some regions may have seen the intended effects, after nearly a decade, more than half of the public favors either abolishing (30.8%) or easing (27.5%) the mandatory closure regulations for large discount stores. Only 8.3% of consumers reported visiting traditional markets to purchase daily necessities on the mandatory closure days of large discount stores.

Even as the distribution industry rapidly changes and new business types emerge, the perspectives of the government and the National Assembly have not moved beyond a dichotomous logic dividing large corporations and small business owners, large retailers and tenant (supplier) companies, franchises and franchisees. In efforts to protect one side, excessive regulations are imposed on the other, leading to backlash. Meanwhile, new forms of commerce that are difficult to regulate under existing laws face a barrage of new regulatory measures under the pretext of establishing new standards.

Recently, discussions have extended beyond large discount stores to include proposals mandating twice-weekly closures for department stores and complex shopping malls, and even further to creating legal grounds to regulate the operating hours and product categories of e-commerce companies like Coupang. However, the consumer perspective is missing from these discussions. If these legal amendments are enacted, services like 'early morning delivery' or 'rocket delivery' could become illegal, preventing consumers from using them. Consumers who used to order groceries via smartphone before bedtime and receive delivery boxes in the morning might have to wear masks again and visit marts during the COVID-19 era or even postpone their purchases.

While regulations continue to accumulate, distribution companies, driven into fierce competition, are engaging in rapid alliances and mergers to avoid being marginalized in the market or to seize new opportunities. The top executives of Shinsegae, the strongest offline retailer, and Naver, the largest online platform, have met to discuss cooperation, and the domestic native open market 11st has willingly partnered with the giant global e-commerce company Amazon. Consumers nod in response to the question, "How did we live without Coupang?" and companies themselves are well aware that "our customers have permanently changed and will never return to the past."

What is clear, as it has been in the past, is that consumers will continue to move toward what is advantageous and convenient for them. They will never open their wallets unless necessary, but conversely, they are willing to pay more for what they perceive as valuable. The criteria consumers use to judge these benefits include factors such as corporate ethics, social value, and ESG (Environmental, Social Responsibility, and Governance).

For the government, it is crucial to remember that policies restricting consumer benefits or choices will not receive sustained support and are unlikely to achieve policy effectiveness. In a market economy system, consumers are legitimate economic actors, and it is difficult to gain sympathy when the government or National Assembly restricts consumer choices based solely on theoretical discussions or seemingly plausible justifications. It would be more appropriate to expand support so that small merchants and neighborhood businesses can quickly adapt to the rapidly changing distribution industry and develop competitiveness to attract customers against department stores and marts. Ultimately, the choice in the market belongs to the consumers.

/ Jo In-kyung, Deputy Head of Consumer Economy Department ikjo@

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