Regulatory Easing for Large Supermarkets Takes 'First Step'...Industry Welcomes It for Now

Government, Large Mart, and Small Retailers Win-Win Agreement
Profitability Review by Branch, Dawn Delivery Expected
Parliamentary Law Amendment Needed but Difficulties Anticipated

A large supermarket in Seoul is closed due to mandatory holiday regulations. Photo by Hyunmin Kim kimhyun81@

[Asia Economy Reporters Lim Chun-han and Kim Yuri] The relaxation of regulations banning online delivery during early morning hours and mandatory closure days for large supermarkets has taken its first step. While the large supermarket industry has expressed a welcoming stance for now, there is still a long way to go before nationwide implementation of the system.

A representative from a large supermarket said in a phone interview with Asia Economy on the 29th, "We welcome this as the first step to correcting unfair competition and a tilted playing field where we previously had no opportunity at all," adding, "Since early morning delivery was limited, this will attract consumers who did not use large supermarket online delivery and is expected to lead to additional sales growth."

Since large supermarkets already operate picking and packing (PP) centers for online delivery at major branches nationwide, they plan to review demand and profitability by branch, prepare additional personnel and delivery vehicles, and launch early morning delivery. Another large supermarket representative emphasized, "This is a symbolic meaning that a foundation has been laid to compete fairly with e-commerce companies from the starting point," and added, "It will also be positive from the consumer convenience perspective."

Large supermarkets have long faced reverse discrimination in competition with e-commerce. According to the Distribution Industry Development Act, operating hours for large supermarkets and quasi-large stores can be restricted from midnight to 10 a.m., and two mandatory closure days can be designated each month. Although there are no legal provisions regarding online delivery, the Ministry of Government Legislation has issued an authoritative interpretation stating that using offline stores as logistics and delivery bases for online business during restricted operating hours or mandatory closure days is effectively the same as opening the store, thus violating the law.

On the afternoon of the 28th, the government and the large supermarket and small-to-medium distribution industries signed a "Cooperation Agreement for Win-Win Development of Large and Small-Medium Distribution" at the Government Seoul Office. The parties agreed to jointly strive to allow online delivery even during restricted operating hours or mandatory closure days for large supermarkets. They also plan to form a regular consultative body to promptly and smoothly implement the win-win agreement, concretize win-win measures, and continue discussions. Large supermarkets announced plans to comprehensively support strengthening the capabilities of small-to-medium distribution through manpower and education to promote digitalization, improve logistics systems, expand sales channels, marketing and promotion, and improve facilities and equipment.

Mart labor union members are holding a rally at the Sangyeok Office of Daegu City Hall opposing the mandatory closure change and the win-win development business agreement.
[Image source=Yonhap News]

Ultimately, discussions on regulatory relaxation will proceed by local governments, but uniform system adoption is currently impossible. Legal amendments in the National Assembly are required for this. However, since sensitive issues such as concerns over infringement on small business districts and protection of workers' health rights are involved, difficulties in discussions are expected. Deputy Prime Minister Lee Jung-won said, "The agreement was reached with stakeholders such as the National Federation of Small Business Associations, Korea Supermarket Cooperative Federation, and Korea Chain Store Association making small concessions," and added, "We expect the National Assembly to fully understand the intent."

Experts positively evaluated this agreement in terms of economic revitalization and consumer utility. However, since the distribution environment that was once divided between large supermarkets and traditional markets has already changed, they say it remains to be seen whether regulatory relaxation will have a significant effect. Professor Kim Si-wol of Konkuk University’s Department of Consumer Studies said, "Now, consumption patterns have changed from simply buying goods at large supermarkets to dining out and enjoying culture," and added, "Closing on weekdays and operating on weekends will help economic revitalization." Professor Lee Eun-hee of Inha University’s Department of Consumer Studies pointed out, "Online consumption has already become mainstream, and from a demographic perspective, the increase in one- to two-person households means this is somewhat late," adding, "It may be one of the solutions, but the situation will not improve for the time being."

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