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Debate reopens on 10 year-old supermarket shutdown rules

A Lottemart in Seoul is closed with a sign informin customers of the mandatory shutdown period. (Yonhap)
A Lottemart in Seoul is closed with a sign informin customers of the mandatory shutdown period. (Yonhap)

Sundays are often a day for family shopping, but supermarkets in South Korea don’t operate every second and fourth Sunday of each month.

Under the mandatory shutdown rules, designated to protect mom-and-pop stores nearby from losing sales to discount store chains, supermarkets have closed twice a month for the last 10 years.

But the ability to shop every Sunday may become possible again with tens of thousands of consumers asking the presidential office to scrap the rule.

According to the presidential office, of the top 10 proposals, “Lifting the big supermarket’s mandatory shutdown rule” ranked top on Monday, hitting more than 422,000 likes as of 4:30 p.m. from the public.

The President office has picked 10 regulatory proposals from the public among some 12,000 civil complaints. It will select top three proposals with the highest number of votes and put in effect. The vote is open until Sunday.

Lee Seong-ah, a 32-year-old white collar employee, said “Even if supermarket chains are closed, I almost never go to traditional markets or small markets. Instead, I order groceries online from Coupang or Market Kurly.”

Amended in 2012, the Distribution Industry Development Act mandates big supermarkets to temporarily shut down their businesses twice a month and limit operating hours from midnight to 10 a.m. Following the law, 90 percent of regions including Seoul designate the second and fourth Sundays of each month for supermarkets to be closed.

The law was revised to protect small local markets from retail giants with an upper hand to lure customers to frequent their supermarket chains, which happen to be more convenient and organized.

According to the Korea Chainstores Association, which is made up of Homeplus, Emart, Lotte Mart, Costco and other supermarket chains, even though there has been a big shift from offline shopping to e-commerce, the 10-year-old law has failed to reflect change in the retail industry.

“Research has showed the mandated shutdown has little effect in boosting local markets. But with the rules, e-commerce giants have exceeded supermarket chains in sales, while snatching customers who can’t go to supermarkets on Sundays or enjoy early-morning online deliveries,” said a supermarket chain representative who requested anonymity.

Although the law does not specify whether it applies to online deliveries of supermarkets, the Legislative Office had interpreted that even online business during the mandate shutdown days and operating hour limits would flout the rules. So online shopping malls operated by big supermarkets cannot provide early-morning deliveries during weekdays and deliveries on shutdown weekends to customers. On the other hand, e-commerce platforms are free from those rules.

Chung So-yeon, analyst at Kyobo Securities, said in a report that if the government lifts the mandate shutdown rules, theannual sales revenue of Emart and Lotte Shopping will surge to 1 trillion won ($762.8 million) and 400 billion won, respectively.

But small markets remain opposed to the idea of revoking the law.

“Mandatory shutdown rules on supermarket chains have been confirmed legitimate (by the Supreme Court) in 2018, when seven supermarkets filed for a constitutional appeal on the matter,” said an official from Korea Federation of Midsized and Small Merchant (KFSM) in a statement on Thursday. “But the new government is trying to stop protecting small stores and play in favor of big companies.”

Experts say shutting down big supermarkets is not the best way to boost a healthy competition in the market.

“In order to restrain e-commerce behemoths from taking over the industry, it is important to revise the law,” said Kim Dae-jong, business professor at Sejong University. “Also, if supermarket chains close business after losing the competition from online platforms, local residents might suffer from a low quality of life.”

By Byun Hye-jin (hyejin2@heraldcorp.com)
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