[Inside Chodong] Early Morning Delivery Trapped in Political Strife

The debate sparked in political circles over allowing early morning delivery services at large discount stores and super supermarkets (SSMs) remains deadlocked. This is due to fierce opposition from small business associations representing traditional markets and small vendors. These small business owners argue that granting early morning delivery services to large retailers and SSMs-which already monopolize capital and distribution networks-will further strengthen their influence, undermine neighborhood businesses, and threaten their survival.

The idea of permitting early morning delivery for offline large retailers originated from a partial amendment to the Distribution Industry Development Act, proposed last month by 15 ruling party lawmakers, including Assemblywoman Kim Donga of the Democratic Party of Korea. Their rationale was that as consumers increasingly use online platforms offering order and early morning delivery services, regulating online operations of large retailers does not significantly contribute to protecting small and midsize distributors. The party, the government, and the Blue House appeared to accelerate discussions by immediately convening a working-level meeting and agreeing to pursue this agenda. However, as opposition to this move has grown even within the ruling party's leadership and government, discussions are now mired in internal discord.

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The current Distribution Industry Development Act frames business restrictions as a direct conflict between large discount stores and small business owners. Restrictions on late-night operations for large retailers and SSMs between midnight and 10 am, mandatory closures twice a month, and limits on opening large stores within a one-kilometer radius of traditional markets or shops-all these measures were justified as ways to protect neighborhood businesses from large-scale capital.

When these regulations were introduced over a decade ago, they appeared to serve as effective safeguards. However, with the rapid growth of online platforms, the situation has changed. As single-person households and dual-income families have increased, consumers have less time for grocery shopping. They now prefer online purchases, which allow them to order desired items and receive them at their doorstep whenever needed. Shoppers can compare prices in real time and find products cheaper than at large retailers or traditional markets-all without having to visit stores in person.

According to the Korea Rural Economic Institute’s “2024 Food Consumption Behavior Survey,” the proportion of consumers purchasing groceries at large retailers dropped from 35.2% in 2023 to 31.5% the following year. SSMs saw their share fall from 15.7% to 13.2% over the same period. Meanwhile, online shopping mall usage more than doubled from 4.1% to 9.7%. Food ingredient marts and neighborhood supermarkets, which are not subject to regulation, saw their share rise from 31.7% to 33.5%, while traditional markets increased slightly from 10.7% to 10.9%. This shows that even with regulations on large retailers and SSMs, far more consumers are shifting to online platforms than to small business owners.

Insisting that large retailers and SSMs are encroaching on neighborhood businesses-while ignoring the change in consumer purchase patterns toward online channels-is unconvincing. It is more realistic to explore ways to foster joint growth in the online sector, as large retailers can leverage their purchasing power and logistics networks to source agricultural products in bulk, collaborate with producers, and lower consumer prices-benefiting both themselves and small business owners.

To reform agricultural distribution structures, the government could also consider supporting infrastructure or costs so that small producers and business owners, who currently lack the scale or information to participate in government-promoted online wholesale markets, can join these platforms. Above all, consumer convenience must be placed at the center of any discussion.

In a situation where consumers already have ample alternatives for purchasing products cheaply and conveniently-even without large sales channels-insisting on blocking early morning delivery services from large retailers amounts to nothing more than a turf war.

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