President Lee Jae-myung's inauguration on the 4th draws attention to whether there will be a full-fledged tightening of regulations across the retail industry. During his campaign, President Lee expressed that protecting local commercial areas would be a top priority. As a result, retail companies, from platforms like Coupang and Baedal Minjok to large supermarkets, are feeling tense.
However, there are views suggesting that President Lee, who emphasized a "pragmatic market-oriented government" in his inaugural speech, will not be able to simply strengthen regulations due to a serious domestic economic downturn.
According to industry sources on the 6th, there is a high likelihood that the easing trend of regulations on large supermarket operations, which the Yoon Suk-yeol government had been promoting, will be abolished. President Lee's pledge document contains no mention of easing regulations on large supermarkets. The Democratic Party of Korea has also maintained its stance that the regulatory posture must be upheld.
As the Yoon Suk-yeol government pushed for amendments to the Distribution Industry Development Act (Distribution Act), there has been a recent trend of converting mandatory closure days for large supermarkets to weekdays in various local governments. Many municipalities, including Seocho-gu and Dongdaemun-gu in Seoul, Uijeongbu in Gyeonggi, Daegu, and Busan, are moving to change mandatory closure days to Wednesdays and Mondays through stakeholder agreements.
The amendment to the Distribution Act centered on easing regulations such as switching mandatory closure days for large supermarkets to weekdays, relaxing business hour restrictions, and allowing online dawn deliveries. However, this amendment was not presented to the plenary session of the 21st National Assembly and was discarded, while discussions in the 22nd National Assembly were halted as the current political situation has become polarized.
However, there are concerns that the business environment could once again regress due to President Lee's focus on protecting traditional markets and small businesses. Nevertheless, since he expressed pragmatic market orientation in his inaugural address, there remains a possibility of adjusting the intensity of regulations, considering the realities of the industry and consumer inconveniences. The autonomy of regions has already been significantly advanced.
The regional currency policy that President Lee intends to expand is unlikely to be applied to retail channels such as large supermarkets and department stores. President Lee stated during his campaign, "The essence of regional currency is to restrict its use to small businesses, local commercial areas, and traditional markets, rather than large supermarkets, thereby promoting consumption within the region."
Strengthening regulations on online platforms is also anticipated. President Lee seems likely to focus on key issues such as establishing a cap on delivery app fees, enacting the Online Platform Act, expanding public delivery apps, and protecting platform workers to correct monopolistic behaviors of large platforms like Coupang and Baedal Minjok. The system will include capping commissions on delivery apps, prohibiting commission discrimination between franchises and small businesses, and requiring the Fair Trade Commission to announce commission rates and standards.
Through the Online Platform Act, there are plans to legalize measures against abuses of power by large platforms and deceptive practices towards consumers, including banning forced in-app payments, preventing dark patterns, and mandating revenue reporting. At the same time, there will be efforts to expand public delivery apps nationwide, and strengthen protections and safety measures for delivery and courier workers. While the industry expresses concerns about infringement on operational autonomy, President Lee strongly advocates for the social necessity of platform regulation.
The retail industry is showing concerns about decreased revenue, worsened profitability, and increased management uncertainty due to intensified regulations. However, as the tightening of regulations on monopolistic platforms like Coupang and Baedal Minjok is expected, some perspectives suggest that offline retail sectors, such as large supermarkets and convenience stores that are relatively free from regulations, may benefit.
An industry representative noted, "While there are some expectations that there could be benefits for offline retail channels if President Lee initiates regulations focused on large platforms, there are also significant concerns that the tightening regulatory trend may impose burdens on the overall retail industry," adding, "It is essential to consider the realities of the industry and consumer benefits in a balanced manner rather than prioritizing immediate political justification."
There are also concerns that excessive regulation amid a serious domestic economic downturn could backfire. Seo Yong-gu, a professor at Sookmyung Women's University who previously served as the president of the 18th Distribution Society, stated, "While expectations are rising that regulations on distribution will be tightened according to existing party lines, the market situation is so poor that there is also a possibility that they will not be tightened for now." He added, "In the case of large supermarkets, the decision has currently been entrusted to local government heads, and given that business districts differ, it should be left to their autonomy."
He continued, "The timing for platform regulation was missed because the current domestic market situation in Korea is so poor. The Online Platform Act should be enacted with minimal symbolic regulations," adding, "If regulations are too strong, it could rather place small platforms in difficulty, potentially strengthening the monopoly power of certain companies."