As the Distribution Industry Development Act marks its 14th year in effect on the 17th, voices in the retail industry are growing that an amendment is needed because the law has failed to uphold its original intent.
According to the retail industry on the 11th, the Distribution Industry Development Act took effect in Jan. 2012 under the banner of protecting neighborhood businesses, including traditional markets. The law mandates two compulsory monthly closing days for hypermarkets and super supermarkets (SSM) and restricts operations from midnight to 10 a.m. Ahead of its expiration on Nov. 23 last year, the National Assembly passed a revision at a plenary session to extend the sunset by four years to Nov. 23, 2029. Unless the law is amended again, the regulation will have lasted for nearly 20 years.
Industry officials say the regulations have distorted the retail market by failing to reflect rapid industrial changes while not fulfilling their initial purpose.
In practice, hypermarkets are restricted from removing products from shelves, packing and shipping them during nighttime hours. Using stores as urban logistics hubs is also not permitted under current law. As a result, offline retailers such as hypermarkets are unable to compete in the dawn delivery market.
In fact, Coupang's annual sales have surpassed the combined sales of the three major hypermarket chains—Emart, Homeplus Co., and Lotte Mart—since 2023. While Coupang's sales rose from 13.3 trillion won in 2020 to 41.2901 trillion won in 2024, the combined sales of the three hypermarkets remained in the 27 trillion to 28 trillion won range over the same period, showing stagnation.
The gap is also clear in consumption indicators. According to the Korean Statistical Information Service (KOSIS), the retail sales index for hypermarkets in Nov. last year was 83.0, down 14.1% from the previous month. That is the third-largest drop on record since statistics began.
According to the Ministry of Data and Statistics (MODS) Korean Statistical Information Service (KOSIS) on the 4th, the retail sales index for hypermarkets in Nov. last year was 83.0, down 14.1% from the previous month. That is the third-largest drop on record since statistics began.
The industry is calling for easing regulations such as limits on operating hours. At the time of the law's enactment, 24-hour operations by hypermarkets were restricted, which also limited delivery times. Compared with online corporations that can offer dawn delivery, hypermarkets are at a disadvantage.
In 2024, a bill to amend the Distribution Industry Development Act was introduced to allow online operations during regulated hours for hypermarkets so that dawn delivery would be possible, but it remains pending in the National Assembly.