How a new Costco tore a Korean province in half

Costco's planned store in Iksan, North Jeolla faces opposition from local merchants concerned about potential economic impacts on small businesses.

An emergency response committee protests the opening of Costco Iksan outside the U.S.-based retailer's Korean headquarters in Gwangmyeong, Gyeonggi. [KOSA MART]

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When Costco Korea set out to open a new branch in North Jeolla's Iksan in 2020, it was never going to be an easy process. Opening a discount store in the country often takes more than a decade; a firm needs to talk to landowners, negotiate terms with surrounding businesses and receive various government approvals .

But what the company didn't expect was fierce opposition from supermarket cooperatives — not from Iksan, but from Wanju County and the nearby city of Jeonju.

Costco is big in Korea: The Washington-based big-box retailer has logged sales growth every single year since 2000, bringing in 6.53 trillion won ($46 billion) last year even as Korean rivals like Emart and Homeplus struggled with stagnation. Its store in Yangjae-dong of Seocho District, southern Seoul, was famously the world's highest-volume Costco in the early 2000s.

But the current row also hints that past setbacks may be due to recur. Costco was forced to retract its plans to enter Cheongju, North Chungcheong, after both the province and advocacy groups strongly opposed its entrance. It also failed to open a store in Jeonju, North Jeolla, in 2017 after facing pushback from small business owners.

The drama continues to unfold in the small inland city, where the city government and merchant associations are locking horns over the planned warehouse store, due to open in 2027, which would be the first Costco in the Jeolla region.

The case against Costco

The Jeonju Supermarket Cooperative, a group consisting of small and medium-sized supermarket owners in the western city, has been one of the more vocal groups in the matter. While supermarket cooperatives are usually responsible for organizing bulk purchases, they also act as the collective voice of the stores to push for and against policies that affect the retail environment.

As one might expect, its members are not excited about Costco.

"The upcoming store is being advertised as being in Iksan, but it's also close to Jeonju," Lee Heon-sik, a senior member of the cooperative. The likely Costco site is 14 kilometers (8.7 miles) away from Iksan City Hall and 23 kilometers away from Jeonju City Hall. "It's not like Costco is only targeting the 260,000 people in Iksan." Lee lamented that the new Costco, despite being a town away, could restrict small business owners' "right to live." The news of Costco opening a store in Iksan first broke in 2019. The retailer signed a conditional contract for a 50,000 square-meter (12-acre) site in Iksan, then retracted it in 2023 after years of slow progress. Costco, Iksan and North Jeolla then signed another nonbinding agreement in May 2024, and the project resumed.

Backlash to the announcement was swift. Smaller sellers and supermarket operators — all of which are based outside Iksan — voiced opposition, complaining that Costco would poach their existing customers.

Supermarket cooperatives in Jeonju and Wanju, Jeonju Merchant Association, North Jeolla Mart Association, North Jeolla Furniture Industry Cooperatives, Citizens’ Solidarity for Participation & Autonomy of North Jeolla, to name a few, formed an "emergency" response committee with the sole purpose of blocking Costco Iksan in late July.

Since then, it held a press conference on Aug. 19, "condemning" the Iksan government for not caring about the small businesses. It also protested outside the Costco Korea headquarters in Gwangmyeong, Gyeonggi, on Friday asking the retailer to stop the process. “Costco’s immense per-store revenue will push many small enterprises and self-employed workers to the edge of the cliff,” the emergency response committee said at a press conference on Aug. 19. Costco would harm not only businesses in Iksan, the committee said, but also all of North Jeolla.

Lee called Costco's 2023 halt, followed by its 2024 resumption, "deceiving," complaining that Costco's pause on the Iksan store gave small businesses a false, temporary sense of relief.

The target of their opposition isn't Costco itself so much as the government that courted it.

A Costco Wholesale store in Gyeonggi [NEWS1]

What the numbers show

Iksan's mayor, Jeong Heon-yul, visited the Korean Costco Wholesale headquarters to convince the company to open a branch in his city after Costco decided to pull out in 2023. He argued that Costco Iksan would directly hire 200 workers and generate 19 billion won per year during an announcement in 2024. An Iksan spokesperson declined to provide the math behind those numbers, stating that "It's ultimately up to Costco to conduct the research and submit it to us."

Though the mayor “agrees” with the merchant concerns, he publicly remains in support of Costco Iksan, emphasizing that it “benefits the locals and the economy.”

“It’s not just about having a large retail firm in the region; it’s about vitalizing the North Jeolla economy,” Jeong said.

Iksan has been helping the retailer by forming a dedicated Costco task force and by aiding its approval procedures and paperwork. It helped change the land use of the proposed site, which was originally zoned for factories, into one that would allow retailers to operate in 2024. Democratic Party lawmaker Han Byung-do, who represents Iksan in the National Assembly, also met the head of Costco Korea to talk about the store in 2023 .

A spokesperson for Iksan's government insists that the customers who shop at Costco and those who shop at small businesses are fundamentally different demographics. "Locals who go to smaller supermarkets and corner stores are not the same as those who go to Costco with their cars," Iksan told the Korea JoongAng Daily, arguing that people driving into Iksan to visit Costco might stop by other shops during the trip. The traditional Yeongdeungpo Market in western Seoul is still alive and well, despite Korea's first Costco having been open nearby since 1994; Lotte Mart, Emart and Homeplus branches are also close.

It's also not clear whether a government-issued withdrawal would even make a difference: Costco ignored an order from the Ministry of SMEs and Startups to halt the opening of its branch in Songdo, Incheon, back in 2017 and was happy to pay 50 million won in fines. A similar scuffle over its branch in Hanam, Gyeonggi, occurred in 2019.

And Iksan's own supermarket cooperative, for what it's worth, has no quibble with the store. The group has not taken part in the protests; instead, it's been waiting for Costco to continue with its plan and submit to the government different ways it could minimize the impact it can have on smaller businesses.

"I would be absurd to just say no without listening to them," said Iksan Supermarket Cooperative executive Ryu Sang-soo. "It's not like all the Iksan population will walk tens of kilometers with slippers to go to Costco every day. They will also shop in the local stores."

The opposition isn't buying any of it.

"There has not been a single case where the opening of a large retailer positively benefited the economy," the committee said at its Friday news conference.

BY CHO YONG-JUN [cho.yongjun1@joongang.co.kr]