KDI: "No Impact on Traditional Markets Even If Large Discount Stores Open on Weekends... Absorbing Online Demand"

Announcement of Sales Trends by Channel in Regions with Mandatory Closure Days on Weekdays
Traditional Market Sales Rise in Dongdaemun, Where Discount Stores Operate on Weekends
"It's Time to Revisit a Decade-Old Policy... Weekday Shift Should Be Considered"

An analysis has found that shifting mandatory closure days for large discount stores from weekends to weekdays does not lead to a decline in sales at traditional markets. As the center of retail distribution has shifted from large discount stores to online platforms due to the rapid growth of companies like Coupang, there is a growing argument that actively considering the transition of mandatory closure days to weekdays is necessary.

Jinkook Lee, Senior Research Fellow at the Korea Development Institute (KDI), released a report titled "The Implications of Converting Mandatory Store Closure Days to Weekdays for the Direction of Distribution Policy" on the 21st. KDI

Jin-guk Lee, Senior Research Fellow at the Korea Development Institute (KDI), released a report titled "The Direction of Distribution Policy Shift Indicated by the Conversion of Mandatory Closure Days to Weekdays" on the 21st. According to the report, an analysis of local governments such as Seoul, Busan, and Daegu, which have switched their mandatory closure days to weekdays, showed that sales at large discount stores consistently increased, while sales at traditional markets did not decline. Based on monthly payment data from Shinhan Card from 2015 to 2024, sales at large discount stores rose across major regions after the switch to weekdays: Daegu by 4.66%, Seoul (Seocho and Dongdaemun) by 2.77%, Busan (Saha, Gangseo, etc.) by 6.22%, and Busan Dongnae District by 7.90%. The relaxation of weekend operating restrictions improved convenience for consumers who heavily depend on weekends, such as dual-income families and households with children.

On the other hand, there was no statistical evidence indicating a decline in sales in the traditional market sectors in most regions. In fact, in areas densely populated with traditional markets, such as Dongdaemun-gu in Seoul, a win-win effect was observed, with sales in the agricultural, livestock, and fisheries sector increasing by 12.79%. Lee explained, "Consumer groups for large discount stores and traditional markets are already differentiated in terms of consumption purpose and accessibility," adding, "There has been a linked consumption pattern in which consumers who planned to purchase industrial and processed food products at large discount stores visited nearby traditional markets to additionally buy fresh food products."

Until now, the regulation mandating closure days for large discount stores was designed on the premise of a substitution relationship between offline stores, with the expectation that restricting store operations would shift demand to local commercial districts. However, empirical analysis revealed that the increase in sales at large discount stores was not at the expense of surrounding business districts, but rather resulted from drawing offline demand back from online shopping.

In fact, an analysis of online payment data from Daegu, where the switch to weekday closures was implemented first across the board, showed that after the change, the total amount of online payments decreased by 2.89%. By age group, the decrease was most significant among those in their 20s (-3.72%), 40s (-3.48%), and 30s (-2.57%). This indicates a clear shift toward offline channels, particularly among younger age groups and dual-income households, who have a high reliance on online grocery shopping and face significant time constraints.

Korea’s retail distribution market has already shifted completely from an offline-based model to one centered on online platforms. Sales in non-store retail businesses (including e-commerce) surged 25-fold, from 3.8 trillion won in 2006 to 96.3 trillion won in 2023, now accounting for over 40% of total retail sales. In contrast, sales at large discount stores peaked at 39.5 trillion won in 2014 and have since declined to about 28.3 trillion won in 2023.

KDI recommended that, in light of these changes in the retail environment and regional conditions, the remaining local governments that still maintain weekend closures should actively consider converting mandatory closure days to weekdays. Lee assessed, "Switching to weekdays is a realistic alternative that broadens consumer choice while alleviating conflicts among stakeholders, compared to a complete removal of closure requirements."

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