Late push for overnight delivery at big box stores should prompt regulatory rethink

Policymakers and politicians should use this moment to recognize how regulations can stifle future opportunities and act accordingly.

A banner announcing a farewell sale hangs on the exterior of Homeplus’ Ansan Gojan store in Danwon District, Ansan, Gyeonggi Province, on Jan. 29, three days before its closure. Homeplus, which is undergoing court-led rehabilitation, halted operations at five stores by the end of January, including the Siheung store in Seoul, the Ansan Gojan store in Gyeonggi Province, the Gyeyang store in Incheon, the Cheonan Sinbang store in South Chungcheong Province and the Dongchon store in Daegu. [NEWS1]

The decision by the Democratic Party’s (DP) policy committee and the Office for Government Policy Coordination to pursue easing regulations on large discount stores is long overdue. At a working-level party-government meeting on Wednesday, the two sides reportedly agreed to allow overnight deliveries by big-box retailers through a revision bill to be introduced by a DP lawmaker. Under the current Distribution Industry Development Act, large discount stores are required to close twice a month and are barred from operating between midnight and 10 a.m. Online deliveries during those hours are also prohibited. By contrast, online platforms such as Coupang have effectively operated around the clock, including dawn deliveries, without comparable restrictions.

According to reports, the party and the government agreed to keep the mandatory monthly closures, which face opposition from local merchants, while allowing overnight online deliveries. This belated move toward deregulation was triggered in part by the recent Coupang issues, in which the company drew public backlash after a data breach affecting 33.7 million users. While large discount stores have remained bound by regulation, Coupang emerged over the past few years as the dominant player in a market reshaped around online shopping. As of last year, online retail accounted for 59 percent of domestic distribution, while offline formats such as big-box stores and corporate supermarkets held shares of just 9.8 percent and 2.2 percent, respectively.

This tilted playing field is the result of outdated regulations that have been left in place for too long. Restrictions on large discount stores were originally justified as a way to protect neighborhood businesses. In 2012, lawmakers revised the law to limit operating hours, arguing that unchecked expansion was hollowing out traditional markets. Yet even as the retail landscape changed dramatically, regulators and politicians maintained a blanket, format-based regulatory regime for 13 years. The outcome was not a revival of traditional markets or alleyway shops but the emergence of a near-monopoly structure dominated by Coupang.

Large discount stores are deeply embedded in local economies, linking store employees with logistics networks, suppliers and surrounding commercial districts in chains of employment and consumption. As cases like Homeplus have shown, their presence affects regional jobs, tax revenues and neighborhood businesses alike. For that reason, regulations should be eased more decisively to create a fairer competitive environment. One DP lawmaker preparing the bill acknowledged that the original goal of promoting traditional markets has lost its effectiveness since the rise of Coupang. If friction with local merchants is a concern, more finely-tuned measures could be explored, such as allowing local governments to flexibly set mandatory closure days on weekends.

Korea has sometimes been labeled a “graveyard of mobility innovation,” after ride-hailing services such as Uber were forced out and the so-called ban on Tada passed the National Assembly. More recently, however, taxi unions have taken the initiative in proposing cooperation with companies including Hyundai Motor Group on autonomous driving. Policymakers and politicians should use this moment to recognize how regulations can stifle future opportunities and act accordingly.

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.