Complex Shopping Malls Subject to Unified Regulations with Marts and Department Stores [Retail Regulations Going Backwards]

② "Not Just a Simple Shopping Mall"...Same Regulations as Large Marts and Department Stores

Bill on Mandatory Closures and Store Location Restrictions for Marts Pending in National Assembly
Questions on Revitalizing Local Markets...Only 12.6% of Consumers Say "I Will Go to Traditional Markets"
Industry: "If Traditional Commercial Preservation Zones Expand, There Will Be Virtually No Places to Open Stores"
Retail Industry Hopes for New Government's Regulatory Easing on 'Gwangju Complex Shopping Mall Installation'

On the 21st, when social distancing measures were fully lifted, the Starfield COEX Mall in Gangnam-gu, Seoul, was crowded with citizens./Photo by Jinhyung Kang aymsdream@

[Asia Economy Reporter Jeon Jin-young] Complex shopping malls are gaining consumers' love as cultural spaces that provide various experiences such as dining and exhibitions beyond simple shopping centers. However, regulations targeting complex shopping malls are being implemented on the same level as large supermarkets and department stores without considering these detailed characteristics. Experts say that such blanket regulations need to be abandoned. The distribution industry is expressing expectations for the new government, which has pledged to ease regulations.

According to the industry on the 11th, there are currently 17 pending amendments to the Distribution Industry Development Act. Among them, 14 bills pertain to regulations on complex shopping malls. Lee Dong-joo, a member of the Democratic Party of Korea, proposed an amendment to the Distribution Act in 2020 to expand the scope of late-night business restrictions and mandatory closures twice a month to include complex shopping malls, department stores, and duty-free shops. Kim Jeong-ho, also from the Democratic Party, submitted a bill to change the traditional commercial preservation zone range, which currently prohibits large supermarkets near traditional markets within 1 km, to within 20 km.

However, there are concerns about whether such regulations will lead to revitalization of local commercial districts. According to last year's survey by the Korea Chamber of Commerce and Industry on "Consumer Awareness and Usage Status of Complex Shopping Malls," 6 out of 10 consumers opposed the designation of mandatory closure for complex shopping malls. Only 12.6% of consumers said they would use traditional markets or alleyway commercial districts even if complex shopping malls were subject to mandatory closure.

There are also concerns about the effectiveness of expanding the traditional commercial preservation zone designation system. An industry official said, "If the bill to expand the preservation zone passes, it would be safe to say that there would be almost no places left for new openings of marts, department stores, including complex shopping malls."

Experts pointed out that complex shopping malls perform roles beyond simple shopping centers and should be viewed separately from large supermarkets and department stores. Professor Jeong Yeon-seung of Dankook University's Business Administration Department said, "It is difficult to consider complex shopping malls as spaces solely for shopping, so applying mandatory closure days and restrictions on new store openings like large supermarkets is unreasonable. Moreover, since most complex shopping malls open in suburban areas, they cannot be seen as competitors to traditional markets. There is no justification for such regulations."

Regulations on complex shopping malls are also being eased overseas. Japan regulated opening dates, store area, closure days, and closing times in the 1973 Large-Scale Retail Store Location Act (Daejeom Law) to prevent impacts on local small and medium-sized commercial districts but later abolished it. In 2000, Japan enacted the Large-Scale Retail Store Location Act with significantly relaxed regulations, removing phrases like "securing business activities of small and medium retailers" and allowing operations and openings as long as they do not cause significant problems such as noise or traffic congestion to nearby residents' living environments.

The distribution industry is expressing expectations that President Yoon Seok-yeol's pledge to attract a complex shopping mall to Gwangju will open the door to regulatory easing. Shinsegae attempted to develop a complex shopping mall and a luxury hotel in Gwangju in 2015 but was halted due to opposition from small business protection groups. However, the atmosphere seems to be changing after President Yoon's election. On the 4th, the Presidential Transition Committee's Regional Balanced Development Special Committee held a policy meeting in Gwangju to attract a complex shopping mall. An industry official said, "I believe a more favorable public opinion will form regarding the easing of regulations on complex shopping malls," conveying the mood.