The "mandatory closure system for large marts," implemented in 2012 to protect traditional markets, has been in place for over 10 years, but its effect has proven to be minimal.

The Federation of Korean Industries announced on the 15th that, according to an analysis by its affiliated Korea Economic Research Institute of 1.3 million annual consumer purchase data, consumer spending at traditional markets did not increase even on days when large marts were closed. In other words, consumers did not necessarily turn to traditional markets just because large marts were closed.

When Large Supermarkets Close, Purchase Online

Online Grocery Purchase Amount on Mandatory Market Closing Days
From 3.5 Million Won to 81.7 Million Won... More Than 20 Times Increase
Large Supermarkets and Traditional Markets Are Not in Competition

The Korea Economic Research Institute analyzed food purchase data from large marts, traditional markets, online malls, and supermarkets using data from the Rural Development Administration's consumer panel, based on 2022, before the introduction of weekday mandatory closures. The results were published in the report "Sales Regulations on Large Marts and the Crisis of Offline Distribution: Overseas Cases and Big Data Analysis of Consumption Patterns."

According to the report, the average amount spent on food at traditional markets on Sundays when large marts were closed in 2022 was 6.1 million won, which was actually lower than the 6.3 million won spent on Sundays when large marts were open. Yoo Minhee, a research fellow at the Korea Economic Research Institute, stated, "Consumers who prefer large marts tend to choose online purchases or buy in advance on other days, rather than turning to traditional markets when large marts are closed," adding, "Large marts and traditional markets can be seen as complementary distribution channels rather than competitors."

Offline Distribution Industry Declines Alongside Growth in Online Shopping

Consumer purchasing patterns shifting from offline to online
Mandatory closure regulations for large supermarkets are rare even overseas
Policies needed to enhance the competitiveness of traditional markets

When comparing the average food purchase amount on mandatory closure days at large marts in 2015 and 2022, spending at traditional markets decreased by 55% (from 13.7 million won to 6.1 million won), while spending at online malls increased more than twentyfold (from 3.5 million won to 81.7 million won). This suggests that the majority of large mart users have shifted to online malls. Food purchases at offline distribution channels (large marts, traditional markets, supermarkets) in 2022 also decreased across the board compared to 2015.

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As consumer purchasing patterns shifted from offline to online, the sales index for large marts also declined. In the first quarter of 2011, it was 114.2, but by the fourth quarter of last year, it had dropped to 92.0. In contrast, the internet shopping sales index surged from 21.8 to 135.3 during the same period. In terms of sales volume, internet shopping surpassed large marts starting in 2020. As a result, the sales and operating profits of the top three large mart companies have continued to decline, and over the past decade, 52 large marts and 202 super supermarkets (SSMs) have closed, indicating a deepening slump across the offline distribution industry. The mandatory closure of large marts has, in effect, increased online consumption and pushed large marts further into decline. Yoo argued, "As internet shopping replaces large marts and the center of consumption shifts online, regulations on large marts may accelerate the contraction of the offline distribution market by driving even more consumers to online shopping."

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The report also pointed out that mandatory closure regulations for large marts are an unusual case rarely seen overseas. Some countries, such as Germany, the UK, Canada, and France, have restricted Sunday operating hours to protect religious activities. However, even where such regulations exist, there is a recent trend toward relaxation in response to changes in the consumer environment. Japan implemented operating hour regulations for large marts in 1973 to protect small retailers, but abolished them in 2000 due to consumer inconvenience and a slump in the distribution industry. Instead, the Korea Economic Research Institute advised that policies should be designed to genuinely boost the competitiveness of traditional markets, such as by introducing digital technologies, applying modern management techniques, and fostering organic connections with local communities. Yoo emphasized, "If the effect of the mandatory closure policy is minimal, it should be boldly improved or alternatives should be sought," adding, "It is a crucial time to build a distribution ecosystem where online, large marts, and traditional markets can grow together."