The debate over the Distribution Industry Development Act is resurfacing. As criticism grows that restrictions on big-box store hours and mandatory closure days do not fit a retail environment reorganized around online, discussions on easing regulations, including allowing dawn delivery, are gaining momentum. This outlet examines the market changes created by the act and their subtext, and seeks regulatory directions and win-win solutions suited to the changed retail landscape. [Editor's note]
"You wouldn't listen when we said that back then..."
As the ruling party and government push to revise the Distribution Industry Development Act (hereafter the act), a response tinged with dejection emerged inside Homeplus Co. With the company having to worry about its very survival, talk of easing regulations that had shackled the growth of Homeplus Co. and other big-box stores for more than 10 years has surfaced.
According to the industry on the 12th, Homeplus Co. will pay employees half of the wages it could not pay last month. Homeplus Co. partitioned the December 2025 payroll, and the same situation has repeated a month later. It also notified staff that it would be difficult to meet the payment dates for Lunar New Year bonuses and February wages.
As Homeplus Co.'s liquidity crisis drags on, insiders and outsiders in retail say the situation might have been different if outdated regulations had been eased a bit earlier. The act, which set limits on big-box store hours (midnight–10 a.m.) and mandatory closure days, was introduced under the leadership of the now-ruling Democratic Party of Korea and has remained in place for 13 years.
Homeplus Co. was early to adopt a store-hub logistics model that uses offline outlets as urban logistics centers. It already uses 80% of its nationwide big-box and Express stores as online logistics hubs for quick commerce (e-commerce that delivers to the destination immediately within 15 minutes to two hours of ordering). The background to the analysis is that if dawn delivery had been allowed through deregulation, Homeplus Co., with its many stores, could have quickly responded to market changes without additional investment.
◇ Offline store logistics-hub strategy blocked by regulation
Reality, however, was different. The act's limits on operating hours and mandatory closure days put Homeplus Co. and other big-box stores at a disadvantage. They were barred from operating from midnight to 10 a.m. and had to close twice a month. The strategy to use nationwide offline stores as logistics hubs to expand delivery was institutionally blocked.
Meanwhile, e-commerce firms led by Coupang captured consumer demand by offering seven-day-a-week and dawn delivery. The gap in market share widened especially as online grocery shopping became routine with COVID-19. Even during the surge in contactless consumption, big-box stores were bound by limits on operating hours and delivery, preventing an immediate response.
Coupang's annual revenue rose from 31.8298 trillion won in 2023 to 41.2901 trillion won in 2024, up about 10 trillion won in one year. In contrast, combined sales of the three big-box chains (E-MART, Lotte Mart, Homeplus Co.) have remained in the 28 trillion won range since 2022. The three operators' store count was 368 last year, down 26 from 2020. A retail industry official said, "We need to revise the act so we can escape a situation where we couldn't even compete with Coupang," adding, "All this time, with our hands and feet tied, we had no choice but to watch Coupang's growth."
Homeplus Co. has cited as factors worsening its finances: ▲ sales declines from mandatory closures of big-box stores (estimated at about 1 trillion won) ▲ customer attrition due to bans on delivery outside operating hours ▲ sales declines during COVID-19. While the crisis narrative around the company certainly includes management failures by MBK Partners, the private equity firm that is Homeplus Co.'s largest shareholder, it also suggests that the impact of regulations undermining big-box competitiveness and shifting the market toward online has been significant.
◇ "Revise the act to spark fair competition"
Korea's retail market structure has already changed dramatically. According to the Ministry of Trade, Industry and Resources, the share of online in total retail sales rose from 46.5% in 2020 to 50.6% in 2024, and last year climbed to an all-time high of 59%. In contrast, big-box stores' share fell from 17.9% to 11.9% over the same period, and last year dropped to 9.8%, falling below 10% for the first time.
Lee Jong-woo, a professor of business administration at Ajou University, said, "Since 2010, the e-commerce market has rapidly taken hold, but laws and systems are not in step with the times," adding, "The problem is clinging to laws and systems without following the changes of the era."
Kim Dae-jong, a professor of business administration at Sejong University, said, "At this rate, the online share could rise to 80% going forward," adding, "Through revising the act, offline retailers should be able to operate in a fair competitive environment." Kim added, "While private equity, focused on short-term gains, bears significant responsibility for the Homeplus Co. crisis, the prolonged regulatory drag on offline retail conditions cannot be ignored."