Retail Distribution Market: Current Status and Implications

This report examines trends in the retail distribution market over the past 10 years and draws out their implications.

Since department stores first appeared on the back of urbanization and economic growth in the 1990s, Korea’s distribution market has been changing rapidly as various types of businesses—including hypermarkets, chain supermarkets, convenience stores, internet shopping, and home shopping—have entered the market. In particular, although there were concerns that the 1996 opening of the distribution industry would lead to the collapse of domestic firms and their absorption by foreign retailers, Korea’s retail distribution industry has continued to grow, centered on large-scale distributors.

Traditional distributors such as department stores and hypermarkets have seen their growth slow due to regulations on large-scale distributors and demographic changes, including the increase in single-person households. Their place is being taken by corporate supermarkets and convenience stores. In addition, as the internet and smartphones have become widespread with advances in IT technology, the share of internet shopping has also been steadily increasing.

The supermarket market in particular merits attention. Small, independently owned supermarkets, which once accounted for more than 90% of all supermarket businesses, are disappearing, and corporate supermarkets are entering in their place. As small-scale firms exit and new, more productive firms enter, the overall supermarket market has improved in terms of sales and employment, and productivity has also risen. In addition, small supermarkets are being replaced by convenience stores of a similar scale, further promoting growth in the overall distribution market.

It is concerning that the government is strengthening regulations on corporate supermarkets and convenience stores under the banner of protecting small business owners and neighborhood commercial districts. The distribution market is changing rapidly in line with advances in IT technology. In this environment, each business has no choice but to secure competitiveness and improve productivity or be pushed out of the market. Overseas retailers such as Amazon are already investing capital to operate logistics centers and stores with robots, thereby strengthening their competitiveness. Domestic retailers also need a policy shift toward an environment in which investment in technology can be made to improve productivity and strengthen competitiveness.

I. Introduction

II. Trends and Current Status of the Retail Distribution Market

1. Number of Establishments in the Retail Distribution Market

2. Sales in the Retail Distribution Market

3. Employment in the Retail Distribution Market

III. Trends and Current Status of the Retail Distribution Market by Sector

1. Department Stores

2. Hypermarkets

3. Supermarkets

4. Convenience Stores

5. Non-Store Retailing

IV. Meaning and Implications of Changes in the Retail Distribution Market

Original title: 소매유통시장의 현황과 시사점

Author: Eun-kyung Kwak

Date: 2018-01-08

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=report&pn=3&idx=10796