"Revitalizing Traditional Markets Through Mandatory Closures of Large Marts? ... Only Online Consumption Increases"

Kim Jihyang Seoul City Council Member and Seoul Institute Joint Research
"Mandatory Closure Relaxation and New Support Policies Must Be Considered"

A study has found that the introduction of the 'mandatory closure of large discount stores' in 2012 benefited e-commerce. It analyzed that this did not lead to the originally intended revitalization of traditional markets, especially in conjunction with non-face-to-face consumption.

According to the research results on 'Changes in On- and Offline Consumption Expenditure in Seoul' released by Kim Ji-hyang, a member of the Seoul Metropolitan Council's Planning and Economy Committee (People Power Party) on the 11th, consumption expenditure at large discount stores and corporate supermarkets (SSM) decreased on the 2nd and 4th Sundays, which are mandatory closure days for large discount stores, while consumption expenditure at traditional markets and neighborhood commercial districts did not increase.

This result comes from an analysis of Seoul citizens' consumption behavior jointly commissioned by the Seoul Metropolitan Council and the Seoul Institute to a major domestic credit card company. The credit card company analyzed five years of big data on card expenditures from July 2019 to June this year for cardholders residing in Seoul. Among them, daily consumption expenditure patterns of about 1.19 million people were examined, and a survey was conducted on 2,157 people whose offline general retail expenditure ratio changed by 10 percentage points compared to five years ago.

According to the study, spending at non-store online marts such as Coupang and Market Kurly from January to June this year increased by 63.7% compared to the pre-COVID-19 period from July 2019 to January 2020. During the same period, offline spending increased by only 21.9%. Moreover, offline spending was concentrated on weekends rather than weekdays, whereas online spending decreased on weekends and then increased again on weekdays.

Assembly member Kim explained, "It is possible to interpret that the decrease in offline consumption expenditure on the 2nd and 4th Sundays, which are mandatory closure days for large discount stores, shifted to e-commerce on weekdays after the closure days."

Regarding the types of stores visited for food purchases, the most common response was non-store online marts (31.5%), followed by offline large discount stores (24.3%), online shopping malls (19.6%), and offline-based online marts (10.2%). The response rates for using traditional markets (3.3%) and neighborhood commercial retail stores (2.2%) were minimal.

When purchasing non-food items, the highest response rate was for visiting online shopping malls at 39.1%, followed by non-store online marts at 32.6%. Neighborhood supermarkets or SSMs (3.5%), neighborhood commercial retail stores (1.8%), and traditional markets (1.1%) had low response rates.

Assembly member Kim said, "The number of large discount stores, which was 423 in 2019, decreased by 22 to 401 this year, resulting in the loss of about 30,000 jobs," and “there is a need to ease the mandatory closure regulations for large discount stores in line with the changed reality and to revise policies for traditional markets and neighborhood commercial districts.”

Kim plans to hold a forum titled 'Changes in Seoul Consumption Patterns and Regional Economic Revitalization: Focusing on Mandatory Closure of Large Discount Stores' at the Seoul Metropolitan Council on the 13th with the Seoul Institute to discuss the research results.

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