The Distribution Industry Development Act (hereinafter the DIDA), which tied down big-box stores in the name of protecting traditional markets and neighborhood business districts, is drawing attention over whether it will be revised for the first time in 14 years since its introduction. Criticism that "the direction of regulation was wrong" has gained traction in politics and industry as the law grew only e-commerce firm Coupang, which was outside the regulatory net, while Homeplus Co., once one of the "big three" hypermarkets, was driven to the brink of bankruptcy. With the National Assembly entering the final stage of forming its leadership for the latter half and putting DIDA revision on the priority legislative agenda, the debate is expected to accelerate.
What ignited the debate was Coupang's massive personal data leak that broke late last year. After more than 33.7 million personal data records were leaked, Bom Kim, the chair, and other members of Coupang's management repeatedly declined to attend a National Assembly hearing, reportedly triggering a sharp shift in sentiment within the ruling camp. Some in the ruling party even claimed that "Coupang is lobbying the U.S. government to save itself and striking back at the Korean government." This is the backdrop for the Democratic Party of Korea, which as recently as September last year had spearheaded extending the sunset on big-box store regulations to 2029, beginning to pivot toward easing regulations.
◇ The two shackles that bound big-box stores in 2012
According to industry sources on the 8th, big-box store regulations under the DIDA were introduced in 2012 to protect traditional markets and neighborhood business districts. There are two core elements. One is an "operating hours restriction" that bars opening from midnight to 10 a.m., and the other is a "mandatory closure" of two days each month. In particular, the operating hours restriction also bundled in online orders and deliveries during these hours. This became the decisive reason big-box stores, even with locations in city centers, could not provide late-night or early-morning delivery.
The center of gravity in the current revision debate is on lifting this "time restriction." The idea is to carve out exceptions so big-box stores can pack, release, and deliver during late-night and early-morning hours. It is effectively seen as a move to increase competitors to Coupang in the online early-morning delivery market and level the "tilted playing field."
Coupang's growth symbolically illustrates the paradox of the DIDA's regulations. While big-box stores were blocked even from early-morning delivery, Coupang, which could take orders and deliver at any time, expanded explosively on the back of Rocket Delivery (2014) and early-morning delivery (2018). Coupang's annual revenue jumped from 2.222 trillion won in 2021 to 3.183 trillion won in 2023 and to 4.912 trillion won last year. In contrast, the combined sales of the three big-box chains—E-MART, Lotte Mart, and Homeplus Co.—stayed in the 2.8 trillion to 2.9 trillion won range over the same period.
Although a so-called "leaving Coupang" movement flared late last year, Coupang's dominance hardly wavered. Its monthly active users (MAU) briefly dipped right after the incident, then quickly returned to previous levels. Even when consumers tried to leave, they could not find a suitable alternative platform. Looking at last year's share of retail sales, online exceeded half the market at 59%, while big-box stores shrank to 9.8%.
Meanwhile, Homeplus Co., formerly the No. 2 big-box chain, was pushed to the edge. After entering corporate rehabilitation proceedings in March last year, it failed to find a buyer, and the Seoul Bankruptcy Court recently decided to terminate the rehabilitation. If it fails to secure at least 200 billion won in operating funds within the immediate appeal deadline of the 14th, the termination will be finalized, likely leading to bankruptcy and liquidation.
Lee Jin-hyeop, an analyst at Hanwha Investment & Securities, said, "With the termination of Homeplus Co.'s rehabilitation, it has been reconfirmed that big-box stores are no longer the dominant force in retail," adding, "Discussions to resolve reverse discrimination regulations such as mandatory closures could get underway in earnest." A retail industry official said, "It may be late, but if big-box early-morning delivery becomes possible, the playing field tilted toward Coupang will be normalized to some extent," adding, "It is also desirable in that it diversifies consumer choices."
◇ Will approval for big-box early-morning delivery speed up?
The National Assembly has also begun to move. The Trade. Industry Energy. SMEs. and Startups Committee of the National Assembly last month referred DIDA amendment bills proposed by both the ruling and opposition parties to the Legislation Review Subcommittee.
A bill by Democratic Party lawmaker Kim Dong-a would exempt only online deliveries by big-box stores and super supermarkets (SSMs) from operating hours restrictions and mandatory closure rules. A bill by People Power Party lawmaker Kim Sung-won goes further, easing distribution regulations broadly by allowing online deliveries, making mandatory closures voluntary, and abolishing late-night operating restrictions. Both bills aim to reflect a retail environment reorganized around online and to resolve the regulatory imbalance between online and offline while expanding consumer choice.
Voices supporting deregulation are being sensed inside and outside the government as well. Park Yong-jin, vice chair of the presidential Regulatory Rationalization Committee (a former Democratic Party of Korea lawmaker), recently noted, "It is time to reexamine regulations made based on market conditions more than a decade ago to fit today's consumer environment," pointing to the need to update regulations. A recent report by the Korea Development Institute (KDI), a state think tank, also questioned the effectiveness of protecting traditional markets and said the current DIDA needs to be redesigned to resolve the regulatory imbalance between online and offline.
Pushback is also strong. Small business owners argue that allowing big-box early-morning delivery would threaten their survival by hurting not only their sales but also the hard-won online sales channels, and they strongly oppose the revision drive. Previously, the ruling camp and government even considered deleting the mandatory closure clause, but reportedly settled on keeping it after backlash from small business groups, reflecting this sentiment. Noh Min-seon, a research fellow at the Korea SMEs & Startups Institute (KOSI), said, "While the move to ease regulations is a step forward in terms of market efficiency, it is necessary to consider complementary measures in the spirit of mutual growth with small businesses."