Blocked by Convenience Stores and Regulations... Closing SSMs

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[Asia Economy Reporter Lim Chun-han] It has been revealed that 144 corporate supermarkets (SSMs) have closed over the past three years. This is due to the loss of competitiveness as distribution regulations such as restrictions on new store openings and operating hours, introduced to protect neighborhood markets, have continued.

According to the Ministry of Trade, Industry and Energy on the 6th, as of March, the number of stores of the four SSM companies?Lotte Super, GS The Fresh, Homeplus Express, and Emart Everyday?was counted at 1,096. The number of SSM stores has been steadily decreasing, with 1,240 stores in March 2019, 1,196 in March 2020, and 1,112 in March 2021. As the number of stores decreases each year, the share of SSMs in sales by distribution type also shrank from 4.1% in 2019 and 4.0% in 2020 to 3.1% in 2021.

Although preference for nearby distribution channels has increased since the COVID-19 pandemic, SSMs have lost that demand to convenience stores and grocery marts. Like large marts, SSMs are subject to mandatory closure regulations twice a month, limiting consumer use on weekends. Meanwhile, grocery marts competing in the same commercial areas face no such regulations and are rapidly encroaching on the market. An SSM official lamented, "Competition with convenience stores and grocery marts is intensifying, and due to operating regulations such as restrictions on operating hours and new store openings introduced to protect neighborhood markets, a decline in SSM sales and store numbers is inevitable."

On the 6th, employees are managing the store at Homeplus Express Siheung Baegot branch.

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Currently, SSMs are seeking new opportunities through strengthening fresh food offerings and fast delivery. They cannot simply give up on the SSM business in securing competitiveness in the rapidly emerging quick commerce sector. Lotte Super has introduced the smart farm brand Naeil Farm to differentiate fresh food and operates a one-hour immediate delivery service. GS The Fresh delivers all products within a 1.5 km radius of its stores in 45 minutes through its Thonsal Delivery service. Homeplus Express also promotes a one-hour immediate delivery service. Emart Everyday operates the fast delivery service Speed e-Jangbogi at 145 stores.

However, additional SSM store openings and dawn delivery are still hampered by regulations. Under current law, new stores cannot open within 1 km of traditional market boundaries, making openings virtually impossible except in new towns. Dawn delivery is also unable to process online orders due to operating hour restrictions and mandatory closure days.

Professor Lee Eun-hee of Inha University’s Department of Consumer Studies diagnosed, "SSM sales are declining as they are being outcompeted by online shopping, convenience stores, and grocery marts. It seems necessary to ease regulations to improve consumer convenience, such as abolishing mandatory closure days for SSMs, separate from large marts."

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