Revised law on big stores could hurt farmers too

After the National Assembly revised a law strengthening regulation of large retailers including discount chains and super supermarkets (SSM), concerns are rising it could severely dent the retail sector as a whole, hurting farmers and small suppliers.

According to retail industry analysts yesterday, the size of the entire domestic retail market will shrink by 8 trillion won ($7.36 billion) and agricultural and marine producers will lose business worth 1.56 trillion won if the revised Distribution Industry Development Act takes effect.

The Korea Chainstores Association (KOCA) estimated that large discount chains will lose business worth 6.98 trillion won and SSMs [small- and medium-sized enterprises] will lose 862 billion won if they are forced to limit their operating hours and close their doors three days a month.

Farmers and marine producer will lose 1.25 trillion won in business from discount chains and 318.3 billion won from SSMs, KOCA projected.

“Restrictions of the operations of large retailers that provide stable sales channels to domestic agricultural produce, especially on weekends when the sales are large, will directly harm farmers,” said an official from the KOCA.

Currently, agricultural and marine products account for 39 to 42 percent of sales at SSMs, and 20 to 26 percent at large discount chains.

The agricultural industry also complained that the including of Nonghyup Hanaro Mart, a national retailer of agricultural produce, as a discount chain would cause them losses.

The retail industry also said the new regulations would deprive consumers of the right to choose between stores, cause confusion and mean fewer jobs in the retail outlets.

The revised Distribution Industry Development Act, which was submitted by the Knowledge Economy Committee and passed by the National Assembly, included small stores inside department stores and shopping centers as a target of regulation.

By Kim Jung-yoon [kjy@joongang.co.kr]