Retailers joined by administration in opposing Sunday closures

The regulation that requires big retailers to close their stores for two days a month may be relaxed for the first time in ten years. On June 23, the presidential office started an online petition ..

A board at a discount mart in Seoul shows the two closure dates of the store in August. [YONHAP]

The regulation that requires big retailers to close their stores for two days a month may be relaxed for the first time in ten years.

On June 23, the presidential office started an online petition for the public to submit proposals and suggestions to the government.

The ending of the mandatory closure of large supermarkets ranked first of all online petitions with 577,415 likes, according to the presidential office on July 31.

First imposed in 2012, the regulations required super supermarkets (SSMs), such as Emart and Lotte Mart, to close their stores on the second and fourth Sunday of every month to support traditional markets.

These retailers are also restricted from operating their stores from 12 a.m. to 10 a.m., including deliveries during this time, under the Distribution Industry Development Act. The mandatory closure of two days a month was implemented under the same act.

Although the regulation was made to protect small and traditional markets, critics say the regulation does not help the traditional markets, but instead increases the inconvenience for customers. Also, online shopping has changed everything.

The move to relax the regulation started in earnest with the inauguration of Yoon Suk-yeol. Before the proposal was put in an online petition, the Fair Trade Commission discussed improvements in regulations with the Ministry of Trade, Industry and Energy in June.

Large retailers are welcoming the government's moves.

Forced to close on the second and the fourth Sunday, weekend periods when sales are higher, the regulation has been greatly affecting their sales.

If the mandatory closure is abolished, it is expected that large supermarkets will log more sales. Emart is likely to generate additional sales of 960 billion won per year and 144 billion won of operating profit, according to NH Investment & Securities.

Lotte Mart, which has fewer branches than Emart, is expected to log an additional 384 billion won of annual sales and 49.9 billion won of operating profit.

The relaxation of the regulation is also anticipated to help them expand their e-commerce services.

Under the current law, big retailers are required to create a separate warehouse if they want to sell products online or send out dawn deliveries on days they are forced to close. The Ministry of Government Legislation considers operating SSMs on compulsory closure days the same as operating a separate store.

"If compulsory closures of stores and restrictions on operation hours are abolished, big retailers can use their existing warehouse for online orders," said Jeong So-yeon, an analyst at Kyobo Securities. "This could help reduce cost and increase online sales."

Retailers say the market has shifted from large discount marts to online marketplaces.

"The retail market tilted toward SSMs about a decade ago, but now, it is more about online retailers like Coupang and Market Kurly," said a spokesperson for a big retailer. "As the situation is different now, regulations that discriminate against large supermarkets should be amended."

According to a survey of 1,000 consumers conducted by the Korea Chamber of Commerce and Industry (KCCI) in June, 67.8 percent said there is a need to relax the regulation, while 49.5 percent said they use other shopping channels, such as online and smaller discount stores nearby, when large supermarkets are closed on the compulsory closure day.

Of the respondents, 33.5 percent said they wait for large supermarkets to open, visiting on another day. Only 16.5 percent responded they use traditional markets.

As the regulation is not exactly helping traditional markets, some regions, such as parts of Gyeonggi, have changed the mandatory closure day from Sunday to one of the weekdays.

A banner seen on Monday at the Seomun Market in Daegu says the abolition of compulsory closures of large discount marts is a threat to the traditional market. [YONHAP]

Despite strong support for a change in the law, opposition exists.

"The compulsory closure of big retailers is a safety net and the marginal line to protect the workers and the retail industry, particularly businesses of small and mid-sized retailers," said the Korea Federation of Micro Enterprises in a statement.

Lee Young, the minister of SMEs and Startups, also opposes the abolition, saying it "should not be done without evaluating the policy's effects after the pandemic."

It is anticipated the abolition of the regulation, or at least the amendment, would take quite a long time, for both the People Power Party and the Democratic Party must come to an agreement.

Retailers remain skeptical about the idea of changing the closure date to a weekday.

"SSMs are operated in chains, so business days should be identical to reduce confusion among consumers and take care of inventories more efficiently," said a spokesperson in the retail industry.

Adjusting to the change in the industry environment is needed.

"It is hard to find cases in which business days of a certain industry are completely restricted," said Woo Tae-hee, the executive vice chairman of KCCI. "It is ideal to come up with effective measures based on objective research as the industry environment has changed over the past ten years."

BY LEE SO-AH, CHO JUNG-WOO [cho.jungwoo1@joongang.co.kr]