[Open Forum] Why Shoppers Won’t Turn from Big-Box Stores to Traditional Markets

There are growing calls to ease the mandatory closure regulation on large discount stores that was introduced to support small business owners and traditional markets. In fact, among the 10 agenda items in the presidential office’s “Top 10 Public Suggestions,” the “abolition of mandatory closure for large discount stores” ranked first with 577,415 “likes.” Nevertheless, the political decision to relax regulations on large discount stores continues to be delayed.

In Gwangju Metropolitan City, Jeollanam-do, support for allowing complex shopping malls to enter the market is dominant. In a public opinion survey conducted by the local newspaper *Mudeung Ilbo*, 58% of Gwangju residents responded that the city should actively attract complex shopping malls. More than 70% of those in their 20s and 30s strongly expressed support.

By contrast, some small merchants oppose the entry of complex shopping malls. They argue that Gwangju’s regional characteristics—its weak industrial base and high proportion of self-employed workers—must be taken into account, and that it is more urgent to devise measures to improve the conditions of merchants suffering from COVID-19 and revitalize local commercial districts.

For merchants operating inside large discount stores, regulations on store operations have adverse effects. From the perspective of large discount stores, closure days can be used for tasks such as inspections of various safety facilities and store rearrangement, and because large discount stores employ many part-time workers, closing on days that do not significantly affect sales can also reduce labor costs. However, these regulations fail to consider small merchants that have a symbiotic relationship with large discount stores. For small merchants that supply goods to large discount stores or operate inside them, such regulations translate directly into losses.

The impact of regulation on commercial districts surrounding large discount stores must also be considered. According to a research report by the Korea Distribution Association, after the E-Mart Bupyeong branch closed, sales at small and medium-sized supermarkets, restaurants, and other businesses within a 3 km radius declined. When a large discount store disappears, foot traffic in the surrounding area also decreases, which in turn harms nearby small business owners.

Has it really helped traditional markets? To revive traditional markets, we must first identify the fundamental causes of their slump. In reality, when large discount stores closed, shoppers did not then turn to traditional markets. Instead, due to spillover effects, consumers flocked to department stores, convenience stores, and Daiso. Consumers avoid traditional markets because of their own lack of competitiveness: inadequate heating and cooling, short business hours, inconvenient restroom access, and insufficient parking facilities. Unless these problems are improved, it will be difficult to revive traditional markets through regulation of any kind.

Although the purpose of regulating large discount stores was to help small merchants, the law failed to fulfill its original intent because it did not correctly identify the underlying problem. It failed to take into account the positions of small merchants in a symbiotic relationship with large discount stores and small business owners in nearby commercial districts.

After the COVID-19 pandemic, both large discount stores and traditional markets are facing new changes. The retail market is shifting into competition between online and offline channels. In this situation, regulating large discount stores cannot steer consumers who have moved to online shopping back to traditional markets. To revive traditional markets, improvements through modernization are urgently needed. Large discount stores and small merchants cannot simply be separated in binary terms; the market must be viewed at the ecosystem level and solutions sought accordingly.

Haein Jung, Intern Researcher, Center for Free Enterprise (CFE)

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Original title: [자유발언대] 대형마트로 가는 발걸음, 전통시장으로 돌리지 못하는 이유

Author: Hae-in Jeong

Date: 2022-09-02

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=free_opinion&pn=8&idx=24936