"Traditional Markets Rank 3rd"... Which Retailers Secretly Benefit from Large Mart Regulations?

KCCI Surveys 108 Distribution and Logistics Experts
"Distribution Industry is a Future Growth Sector... Regulations Must Be Eased"

Among 10 distribution and logistics experts, 7 (70.4%) evaluated that regulations on large discount stores caused losses not only to the large discount stores themselves but also to the protected traditional markets. The sectors that benefited from the regulations on large discount stores were identified as online shopping, food material marts, and convenience stores.

The Korea Chamber of Commerce and Industry announced on the 10th that a survey was conducted on 108 experts from four academic societies?the Korean Distribution Science Association, the Korean Consumer Science Association, the Korean Franchise Association, and the Korean Logistics Association?regarding "10 Years of Distribution Regulation, Expert Opinions," and the results were as such.

Under the current Distribution Industry Development Act, large discount stores and corporate supermarkets (SSM) must close twice a month on public holidays, and in addition, operating hours are prohibited from midnight to 10 a.m. Since the distribution regulations, the market share of traditional markets in the overall distribution market decreased from 14.3% in 2013 to 9.5% in 2020, and the market share of large discount stores also declined from 21.7% in 2015 to 12.8% in 2020.

The majority of experts (83.3%) responded that "abolishing or easing regulations on large discount stores" is desirable. Only 16.7% answered that the current level should be maintained. Regarding the "effect of revitalizing traditional markets due to mandatory closure days for large discount stores," 76.9% said there was "no effect," while 22.0% said there was an effect.

In response to the question about the "perceived beneficiary business types due to regulations on large discount stores," more than half (58.3%) of respondents chose "online shopping." Food material marts and medium-sized supermarkets (30.6%), and convenience stores (4.6%) followed. The proportion identifying large discount stores as competitors to traditional markets was only 14.8%, which was lower than supermarkets and food material marts (28.7%), online (27.8%), and nearby traditional markets (25.0%).

Experts most frequently cited "restriction of consumer choice (39.8%)" as the biggest drawback of large discount store regulations. This was followed by "not in line with the times (19.4%)," "discrimination against online (11.1%)," and "hindrance to market competition (10.2%)." Furthermore, 74.1% responded that "flexible operation of mandatory closure days for large discount stores" and 71.3% said "allowing online delivery" are necessary regulatory relaxations.

Among respondents, 76.9% stated that "business regulations on franchise-type SSMs operated by self-employed small merchants (where the franchise headquarters establishment cost burden is less than 50%) are excessive regulations on self-employed small merchants and should be excluded from business regulations."

A scene from a traditional market in Seoul. Photo by Hyunmin Kim kimhyun81@

Regarding future policy directions, 88.9% agreed that "regulations on large discount stores should be eased or abolished, but support for strengthening the competitiveness of small and medium distribution should be provided." This means shifting from policies that strengthen regulations to policies that support the self-sustainability of small and medium distribution.

As the policies that small and medium distribution, including traditional markets, should prioritize to gain competitiveness, "specialized competitiveness (50.0%)" was most frequently chosen. This was followed by "service competitiveness (48.1%)," "delivery logistics competitiveness (42.6%)," "digital competitiveness (42.6%)," and "organization and collaboration of individual merchants (20.4%)."

Jang Geun-mu, Director of the Korea Chamber of Commerce and Industry Distribution and Logistics Promotion Institute, said, "Although an agreement was reached last December on institutional improvements and win-win measures between large discount stores and small and medium distribution, it has not yet led to concrete results." He added, "The distribution industry should be recognized not as a regulated sector but as a future growth industry," and emphasized, "The National Assembly and government must actively step forward to enable regulatory relaxation and the derivation of practical win-win measures."

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