Traditional retailers rejoice over Yoon's regulations plans

Industry

Published: 13 Mar. 2022, 07:00

Traditional retailers rejoice over Yoon's regulations plans

A plot of land in Seo District, Gwangju, where Shinsegae Group was planning to build a big shopping complex in 2017. The plan was scrapped due to opposition by small merchants doing business in the area. [JOONGANG ILBO]

Traditional retailers are expected to win under president-elect Yoon Suk-yeol’s upcoming administration, with a new shopping complex expected in Gwangju and an easing of regulations.

During Yoon's presidential campaign in February, he pledged to build a big shopping complex in Gwangju, saying it was the only city without such a facility. Big shopping complexes are defined as a facility where people can enjoy various leisure activities such as shopping, movie-going and dining all at once. Shinsegae's Starfield shopping mall and Lotte's Lotte Mall are some well-known examples.

If the president-elect keeps his promise, either Lotte or Shinsegae is expected to fight for the opportunity considering those two are the only companies that are capable in operating a mega shopping complex.

Shinsegae Group in 2015 signed a memorandum of understanding with the city of Gwangju to build a hotel and shopping mall complex. However, the plan was scrapped due to protests by small merchants and civic groups saying the mall will take away their customers.

The company tried again in 2017, this time suggesting a smaller shopping complex — 40 percent the size of its previous plan — but also failed due to opposition from small business owners.

Although its plans to build a big shopping complex was scrapped, its subsidiary Emart operates three Emart branches in Gwangju and one department store by subsidiary Shinsegae Department Store.

"When Shinsegae Group Vice President Chung Yong-jin got caught up in a myulgong controversy, president-elect Yoon uploaded a photo of him buying anchovies and beans at Emart," said a spokesperson working for a retail company. "Based on that, some people are saying that Yoon was considering building a Starfield mall when he made the pledge [to build a shopping complex in Gwangju]."

In January, Chung uploaded a series of photos to Instagram and captioned it with myulgong, which means crush communists in Korean. Politicians from the People Power Party (PPP) chimed in, with Yoon uploading a photo of himself at Emart shopping for anchovies and beans, myeolchi and kong in Korean. When those two words are put together, they sound like myulgong.

Lotte's Lotte Shopping operates two Lotte Outlet branches in Gwangju, which consist of various apparel brands, a Lotte Mart and restaurants, although it is considered too small to qualify as a big shopping complex.

The possibility of retail regulations easing is more good news for companies.

Yoon emphasized that economic growth shouldn't be led by the government, but led by private companies and said he plans to ease regulations. One of the biggest struggles for retailers is the act that prevents them from opening discount marts every second and fourth Sunday.

Based on the Distribution Industry Development Act enacted in 2012, discount marts run by big companies must close on Sunday every two weeks to help small merchants and traditional markets. Emart, Homeplus, Lotte Mart, Costco are some of the discount marts that are impacted by this act.

According to the Federation of Korean Industries (FKI), the revenue of small merchants fell 6.1 percent since 2012 despite the regulation. A FKI survey of 1,036 people showed that only 8.3 percent of the respondent go to traditional markets when big discount marts are closed on Sundays. There were 37.6 people who said they go to small discount stores in their neighborhoods and 28.1 percent said they just wait and go to big discount stores the next day.

"Before we even talk about retail regulations, its important to evaluate if the existing ones are in line with today's situation," said a spokesperson for the FKI. "Globally, governments ease retail regulations to overcome economic hardships in such times."

Although some say the restrictions aren't as effective in protecting traditional markets, an amendment to the Distribution Industry Development Act is pending in the National Assembly. The amendment plans to extend biweekly Sunday closures to department stores and big shopping complexes.

"Regulating offline stores won't help small local businesses," said a spokesperson for a company running a shopping mall. "We're not asking to unconditionally lift all restrictions, but asking to modify them to fit reality."

BY CHOI HYUN-JU, LEE TAE-HEE [lee.taehee2@joongang.co.kr]