Japan’s box stores anger merchants

Economy

Published: 18 Mar. 2013, 06:46

Japan’s box stores anger merchants

Members of groups advocating for the protection of local markets held a rally Friday in front of a Tra Box store in Haeundae District in Busan and called for a boycott against products sold by the Japanese retail franchise. They argue the company is hurting sales at local merchants. [NEWSIS]

BUSAN - Members of local merchant protection organizations staged a rally Friday to protest against the growing number of Japanese supermarkets, which they argue erode sales of smaller local merchants by skirting around regulations designed to protect smaller businesses.

Outraged members of the Save Local Stores Alliance, the Korea Federation of Retailers Organization and others advocating the protection of smaller stores held signs calling for a boycott of products from those Japanese retail stores in front of Tra Box, a supermarket in Haeundae District, Busan. Three more stores from the same chain have opened in that district.

They complain that the Japanese supermarkets are not subject to a series of protective measures meant to protect mom-and-pop stores even though local merchants are seriously hit by the arrival of those retail chains.

“We need laws or regulations that can stop the Japanese chains from encroaching into districts where smaller merchants are clustered,” said Uhm Tae-gi, executive secretary of the Save Local Stores Alliance.

Most of the Japanese chain stores are smaller than 3,000 square meters (3,588 square yards), effectively shirking national protective measures applied to super supermarkets of over 3,000 square meters. The rules require larger markets not be built within 1 kilometer (0.06 mile) of a traditional market and that some of them close every other Sunday.

The supermarkets’ business, however, is brisk, attracting consumers with its well-arranged-shelves, flashy signs and cutthroat discounts.

“A pair of slippers sells for 1,600 won [$1.40], which is about half of those sold in other super supermarkets,” said 48-year-old homemaker Kim Ji-seon, who was browsing an array of well-arranged groceries at the supermarket in Busan’s Jwa-dong.

In contrast, owners of smaller retail and convenience stores face a struggle as many of their consumers turn to bigger retail stores like Tra Box.

“The daily sales of my store have declined to half from 800,000 won to 400,0000 won since the Tra Box opened in 2011,” said Choi Dong-woo, who runs a convenience store just 40 meters away from the Japanese store.

“I made a three-year contract with this convenience store, but I don’t think I am going to renew the contract,” the 28-year-old said, adding that another neighboring retail shop closed four months ago.

Trial Company, the parent company of Tra Box, operates 131 stores across Japan with annual sales of over 3 trillion won. The Fukuoka-based company has opened 11 shops in Korea since 2010, mainly located in the southern part of the country. Annual sales of the Japanese market operating in Korea surged from 50 billion won in 2011 to 70 billion won in 2012.

Another Japanese retail franchise Valor is looking to build its presence in Korea, opening two stores in Busan and Gimhae, South Gyeongsang, last year.

Tra Box said that it is considering slowing down its expansion.

“We had a plan to open more stores in the southeastern part of the country, but we are very cautious about carrying out the plan after facing protests by local merchants,” said Kang Gwang-ho, a PR manager of Trial Company.

By Park Eun-jee, We Sung-wook [ejpark@joongang.co.kr]