The Korea Herald

지나쌤

Discount retailers flounder on policy hurdle, slowing economy

By KH디지털2

Published : March 23, 2015 - 16:18

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Major South Korean supermarket chains are grappling to stay afloat as policy measures aimed at protecting mom-and-pop stores as well as lackluster economic growth squeeze their sales, data showed Monday.

E-mart, the country's biggest discount chain brand operated by retail conglomerate Shinsegae, saw its sales reach 10.1 trillion won ($9.1 billion) last year, staying on par with 2012. The data only covers branches that were established before 2012.

Its smaller rival Lotte Mart, run by retail giant Lotte, logged 6 trillion won in sales last year, slightly falling from 6.5 trillion won in 2012, according to company data.

British supermarket chain Tesco's South Korean brand Homeplus has also bore the brunt of slowing sales. The company is estimated to have posted sales of 10.1 trillion won last year, down 1.5 percent from the previous year.

Sluggish sales growth is mostly attributed to slower-than-expected economic recovery and government policy that bans conglomerate-run discount chains from operating on certain weekends.

From 2012, discount chains in most areas are mandated to close their shops for two weekend days each month to help steer shoppers to smaller retailers. On an annual basis, the regulation requires discount chains to close for roughly 20 days. (Yonhap)