The government and the ruling party have begun reviewing the easing of regulations on big-box stores for the first time in 13 years. The Democratic Party of Korea on the 6th proposed an amendment to the Distribution Industry Development Act to allow early morning delivery by big-box stores and corporate supermarkets. The gist is to create an exception so that operating-hour regulations do not apply to e-commerce.
If the regulations are eased, early morning delivery will become possible from roughly 400 stores nationwide owned by the three big-box chains. In effect, full-fledged competition with Coupang, which had virtually monopolized early morning delivery, will become possible, and consumer welfare is expected to grow.
While big-box stores are welcoming the move to ease regulations, many say there is still a long way to go. Small-business groups are strongly pushing back, urging the government and the ruling party to immediately halt the plan to allow early morning delivery by big-box stores.
A distribution industry official said, "Woo Won-sik, who created the Distribution Industry Development Act and is now the National Assembly speaker, is still actively working in the Euljiro Committee. We will have to watch to the end to see how much the voices opposing deregulation are reflected."
According to the distribution industry that day, the three big-box chains—Lotte Mart, E-MART, and Homeplus Co.—own roughly 670 stores nationwide. Of these, 460 stores, or about 70%, can offer early morning delivery. Coupang has about 246 logistics hubs nationwide. If the regulations are eased, it would create a counterweight to Coupang.
If big-box stores can offer early morning delivery, customers will be able to order items handled by the stores—such as fresh food and manufactured goods—via apps and receive them the next day. From the consumer's perspective, they can choose to buy from wherever delivery is fastest and prices are lowest, whether a big-box store or Coupang. In other words, the options widen. As the de facto semi-monopoly disappears, the benefits consumers can enjoy may grow.
The welfare of workers such as couriers participating in the early morning delivery market could also improve. If the market expands and more places seek workers to raise the quality of delivery services, treatment of these workers could improve. A distribution industry official said, "It is positive that we can finally escape a situation where we could not even compete with Coupang," adding, "Until now, with our hands and feet tied, we had no choice but to watch Coupang grow."
For the past 13 years, big-box stores have been restricted from late-night operations from midnight to 10 a.m. under the Distribution Industry Development Act. They were also required to close two days every month. Depending on the local government, details varied, but the closure dates were recommended to be on weekends.
In fact, many have said the Distribution Industry Development Act is an anachronism when online shopping accounts for 80% of total consumption. Rather than visiting traditional markets when big-box stores close, more consumers have been ordering via smartphone, but the regulations have failed to keep up with the times.
A distribution industry official said, "To draw consumers out, big-box stores, the self-employed, and neighborhood commercial districts all need to come together and generate synergy." In fact, there is research showing that after big-box stores closed, sales by self-employed businesses in neighborhood commercial districts fell.
According to the report "An analysis of sales linkage effects between big-box stores and surrounding commercial districts," released by the Bank of Korea Economic Research Institute in Mar. 2024, when Lotte Mart's Dobong and Guro stores in Seoul closed in 2020, nearby neighborhood commercial districts saw sales fall 7.5% and the number of transactions drop 8.9%.
However, some expect difficulties ahead before actual deregulation. The Distribution Industry Development Act was legislated in the past led by Woo Won-sik of the New Millennium Democratic Party, and the Euljiro Committee's influence has grown even larger than before. For now, the Korea Federation of Micro Enterprise (KFME), the Korea Merchant Association, and the Korea Supermarket Cooperative Federation issued a joint statement expressing opposition.
In a joint statement on the 6th, these groups argued, "The restrictions on operating hours and the mandated closure system under the Distribution Industry Development Act are the minimum safety net that has protected neighborhood commercial districts and traditional markets," adding, "The government's move directly denies the purpose of the law."
A distribution industry official said, "It is not even that restrictions on mandated closure days are being discussed; there are already opposing voices even about allowing only early morning delivery," adding, "We need to watch closely how proactively the Euljiro Committee, which has deep ties with small businesses, will move to ease regulations."