Retailers meet to resolve tensions, form joint bodyRepresentatives of retail stores big and small gathered for the first time on Monday to discuss how to resolve their deepening conflicts.
Large stores voluntarily agreed to limit the number of new outlets they roll out and close existing ones on some weekends, according to the Ministry of Knowledge Economy.
The non-binding pledge came after small vendors and traditional markets blamed large retailers for unfairly poaching their business by expanding aggressively.
The heads of six large retailers including E-Mart, Lotte Mart, Homeplus, GS Retail, Lotte Super and E-Mart Everyday met with the head of associations representing a range of players.
The Korea Merchant Association represented vendors at traditional markets, the Korea Supermarket Alliance spoke on behalf of smaller local supermarkets, and the Korea Chainstores Association spoke up for large retailers.
With Knowledge Economy Minister Hong Suk-woo presiding, they agreed to form a “Retail Industry Development Consultative Group” by Nov. 15 to create a lasting and effective conflict-solution platform.
More details on how the large chain stores will put the brakes on their rampant expansion will be thrashed out after the group is launched. They have had several preliminary meetings since July.
“It is significant that retailers came to the discussion table because what they were there to talk about will have a direct impact on their survival in the retail market” said a high-ranking official at the ministry.
The ministry refuted criticism that the agreement lacks teeth and will have little impact in supporting shared growth as it is not legally binding.
“We believe it will actually work better because no one has forced them to establish such a consultative body or set up rules,” the official said.
Supporting his argument, some large retailers, like the local unit of U.S. retail giant Costco, are still openly flouting a law introduced in April that forbids them from opening on two weekend days a month. No Costco officials turned up at the meeting.
“We said on Monday that we’ll invite Costco and Hanaro Mart to join us to help form the consultative group,” the official added.
Other regional stores are embroiled in an ongoing lawsuit to find ways to stay open on all weekends.
Although Monday’s meeting was initiated by the ministry, the government said it will now merely act as a mediator should the discussions become deadlocked.
On a less positive note, Homeplus was found to have broken several promises it made to a local district office in May when it opened a store in Andong, North Gyeongsang.
The store was allowed to open on the condition that it would dedicate some of its space to a cultural gallery, donate some of the money from its tenants to support regional development, and house small academies or hospitals within its premises. However, it is still using the promised rental space to sell promotional items.
By Lee Sun-min [email@example.com]