Korean Consumers’ Choice, Large Retailers or Local Markets?

Since the plaintiff discount stores do not fit in the legal definition of ‘large mart,’ the Seoul High Court ruled that the ordinances couldn’t be imposed on them. (image: Mike/flickr)

SEOUL, Dec. 16 (Korea Bizwire) — Six large retailers including Lotte Mart, E-Mart and Home Plus filed a petition against two Seoul districts, claiming that the ordinances restricting operating hours or mandating the closure of supermarkets every other Sunday were discriminatory.

On December 12, Seoul High Court ruled in favor of the plaintiffs, saying that the ordinances are not effective in helping local market merchants and are eliminating choice for consumers.

The Seoul High Court also said that “according to ‘the law of development for distribution’, discount stores subject to the ordinances cannot be classified as ‘large marts’ since the legal definition of ‘large mart’ is ‘stores which sell products without the help of shop assistants’, and the subject discount stores actually have shop assistants working to help customers.”

The Seoul High Court said the ordinances imposed on large retailers were based on ‘the law of development for distribution’ and the ordinances directed to ‘large marts.’ Since the plaintiff discount stores do not fit in the legal definition of ‘large mart,’ the Seoul High Court ruled that the ordinances couldn’t be imposed on them.

Some are worrying that this ruling could result in large retailers expanding their operating hours to 24 hours a day and further jeopardizing the market conditions for small merchants. The Institute for Democracy and Policies under the New Politics Alliance for Democracy (NPAD), a political party in South Korea, conducted a survey regarding this issue.

According to the survey, 38.3 percent of the respondents said that the existing regulations obligating large retailers to cut operating hours or to have mandatory closing dates should be tougher on the businesses. 37.5 percent of the respondents said that the existing regulations are sufficient. Only 18 percent of the respondents supported the relaxation of the regulations.

Merchants in a traditional market are rallying in front of a “large” market. (image: Chungbuk CCEJ)

When it comes to questions regarding problems that small merchants are facing, 49.2 percent of the respondents said that they are willing to shop more often at local markets to help give small retailers a boost.

38.3 percent of them said that they would like to buy more from small retailers in local markets, but they consider that option impractical at the same time. 7.3 percent of the respondents said that they do not think shopping at local shops helps small businesses, and they will not actively purchase products from small merchants.

When asked what causes poor business results for small merchants and traditional markets, 33.9 percent of the respondents said that large firms’ expansive strategy is to blame. 30.2 percent of them said rental and commission costs are too high for small merchants to handle. 25.3 percent of them answered that the severe competition resulting from an excessive number of small businesses is to blame.

By J. W. Choi (summerchoi@koreabizwire.com)