Discussions on amending the Distribution Industry Development Law, which has restricted large supermarkets for 14 years, are expected to gain momentum. With the formation of the 22nd National Assembly's second half and the government seeking input from the distribution sector, there are predictions that the revision process will accelerate. However, strong opposition from small business owners concerned about the impact on local markets is anticipated during the legislative process.
According to industry sources on July 27, the Ministry of Trade, Industry and Energy recently convened a meeting with representatives from large supermarkets and the Korea Chain Store Association to discuss strategies for the development of the distribution industry. With the government actively seeking feedback, the industry expects discussions on revising the distribution law to gain traction.
Large supermarkets have been constrained by restrictions on operating hours. Under the current Distribution Industry Development Law, these stores cannot operate from midnight to 10 a.m. This limitation not only prevents them from opening during these hours but also restricts product packaging and removal, effectively blocking their entry into the early morning delivery market.
Meanwhile, consumer spending has shifted from offline to online platforms. According to the Ministry of Trade, Industry and Energy, sales at large supermarkets fell by 5.1% in May compared to the same period last year. In contrast, online retailers like Coupang and Naver accounted for nearly 60% of total sales among major distribution companies.
Homeplus's entry into corporate rehabilitation due to financial difficulties has also fueled calls for regulatory reform. Lawmakers have pointed out that the current regulations, which only apply to offline stores, do not reflect the changing market environment. In response, the Democratic Party has proposed allowing online deliveries on mandatory holidays and during restricted hours, considering the increase in early morning delivery users. The People Power Party has suggested abolishing the operating hour restrictions and removing the mandatory holiday closure rule, allowing for adjustments based on local conditions. While there are differences in the scope of regulatory relief, both parties agree on the need to amend the current law.
A national research institute has also criticized the regulatory framework as outdated. The Korea Development Institute (KDI) stated in a report last month that the distribution law, designed primarily for large offline stores, has become increasingly disconnected from the current market, where online orders and early morning deliveries are commonplace.
However, small business associations are pushing back against regulatory relaxation, arguing it threatens the survival of local markets. The Korea Supermarket Cooperative Federation recently issued a statement claiming that easing restrictions on large supermarkets ignores the needs of small grocery stores and local businesses. They warned that in the current environment of high inflation and interest rates, lifting regulations on large supermarkets could cause irreparable harm to small neighborhood businesses, emphasizing the need for protective measures for local markets.
Some voices are calling for a reassessment of the regulatory balance across all distribution channels, both online and offline. KDI researcher Lee Gong stated, "Discussions on legal amendments should ensure regulatory equity between online and offline channels to prevent an undue burden on one side." He added that if Chinese e-commerce platforms like Temu and AliExpress establish early morning and same-day delivery logistics in South Korea, it could lead to a decline in sales for offline retailers, highlighting the need for monitoring and flexible policy adjustments.
* This article has been translated by AI.
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