An analysis found that in regions that changed big-box stores' mandatory closing days from weekends to weekdays, sales at big-box stores increased while sales at traditional markets did not decline. Instead, online spending decreased. This raises the possibility that weekend operating restrictions on big-box stores may have had the effect of "expanding online consumption" rather than "protecting traditional markets."
The system requiring big-box stores to close "two weekends a month" was introduced in 2012 to protect traditional markets and neighborhood commercial districts. However, as analyses indicate there is no clear substitution effect between big-box stores and traditional markets, calls are growing to reexamine the system.
◇ Big-box stores, SSMs, and outlets generally saw sales rise, while convenience stores fell
Korea Development Institute (KDI) stated accordingly on the 21st in a report titled "Implications of shifting mandatory closing days to weekdays for the direction of distribution policy."
The mandatory closing day system for big-box stores is a regulation that designates two closure days per month for big-box stores and semi-super supermarkets (SSM). While it originally operated on the principle of closing on public holidays, some local governments, including Daegu, Cheongju, Seoul, Busan, and Gyeonggi, have recently changed the closing days to weekdays. As of Feb. last year, 30 cities, counties, and districts had shifted mandatory closing days to weekdays, about 13% of all basic local governments.
KDI estimated the policy effect using a regression approach that compares before-and-after monthly average sales trends between regions that shifted to weekdays and those that did not. Simply put, if sales at big-box stores in region A rose by 8 after the weekday shift, and sales in other regions rose by 3 over the same period, the remaining 5 would be viewed as the effect of region A's weekday shift. This separates the impact of the weekday shift by netting out sales changes due to national consumption trends.
The analysis showed that big-box store sales consistently increased in key regions. The weekday shift effect was estimated at 4.7% in Daegu, 2.8% in Seoul, and 6.2% to 7.9% in Busan, compared with the prior year's monthly average sales. KDI said, "Dual-income households or those with children tend to concentrate consumption on weekends," adding, "As consumers can now shop at their preferred time, choice and convenience have expanded."
SSMs also saw sales increases of 3.4% in Daegu, 0.9% in Seoul, and 4.1% in Busan's Dongnae District. However, Busan's Saha, Gangseo, Dong, and Suyeong districts saw a 1.3% decline. While sales rose in modern large-format retail formats such as shopping centers, malls, and outlets, convenience store sales fell in some regions. KDI said, "As weekend accessibility to big-box stores recovered, some demand that had dispersed to convenience stores and SSMs may have shifted back to big-box stores," adding, "Modern large-format retail formats are largely built around big-box stores and appear to have benefited."
◇ Traditional markets adversely affected? … "Other local governments should also consider weekday shifts"
The notable point is that no consistent results were found to support a decline in sales at traditional markets and neighborhood commercial districts. While some regions showed negative estimates in living goods, food, and sundries and in agricultural, livestock, fisheries, and traditional retail formats, KDI's analysis said it was difficult to view them as statistically significant declines. In Daegu's living goods, food, and sundries segment and Seoul's agricultural, livestock, fisheries, and traditional retail segment, sales effects of 15.4% and 12.8%, respectively, were observed instead.
Online spending, by contrast, declined. An analysis of changes in online payment amounts in Daegu, the earliest city to implement a weekday shift, estimated the online spending decline at 2.89%. The decrease was particularly pronounced among people in their 20s, 30s, and 40s.
KDI said, "Regulatory easing such as shifting big-box stores' mandatory closing days to weekdays suggests that it may not directly lead to a consolidation of sales declines in traditional markets and neighborhood commercial districts," adding, "Some consumption may have moved from online to offline channels." It continued, "In a distribution environment where purchases are made with a single click, constraints on offline stores may act as a factor facilitating consumption shifts to online channels," adding, "Other local governments also need to actively consider shifting mandatory closing days to weekdays."