"Doubts Over Effectiveness"... Convenience Stores Struggle with Various Regulations [Reversing Distribution Regulations]

④Convenience Stores Enter Second Heyday but Hampered by Regulations

Latecomers Struggle to Expand Stores... Only Signboard Snatching Wars
Even with Outdoor Covers, Inside Filled with Tobacco Ads
Franchisees Burdened by Costs Due to Stricter Refrigerated Distribution Temperature Standards

On the 13th, various products are displayed at a convenience store in Seoul.

[Asia Economy Reporter Lim Chun-han] The convenience store industry is experiencing a second heyday since the COVID-19 pandemic, but it is struggling due to various regulations. Restrictions on nearby store openings are making it difficult for latecomers to expand the number of stores, and bans on external exposure of tobacco advertisements and raising the preservation and distribution temperature for refrigerated foods are also causing controversy.

According to the Ministry of Trade, Industry and Energy on the 13th, as of March this year, the number of CU, GS25, and Seven Eleven stores totaled 43,077. The prevailing view is that the domestic convenience store market has virtually reached saturation. Because of this, the convenience store industry has created voluntary regulations to protect franchisees' trade areas, which the Fair Trade Commission approves. According to these regulations, new franchises are not allowed to open stores nearby. Typically, the designated distance for tobacco retailers serves as the standard, which ranges from 50 to 100 meters depending on the local government.

The problem is that the number of convenience stores is a key indicator directly linked to economies of scale and sales. From the perspective of latecomers, restrictions on new store openings have hindered external growth. As a result, convenience stores have no choice but to focus on a wasteful competition to snatch prime trade area stores.

There are also criticisms that attaching translucent sheets to block external exposure of tobacco advertisements is ineffective. The National Health Promotion Act and the Tobacco Business Act stipulate that tobacco advertisements inside tobacco retail stores should not be visible from the outside. Violations can result in imprisonment of up to one year or fines of up to 10 million won. Failure to comply with correction orders can lead to business suspension for up to one year. Although this law was enacted in 2011, it had been largely ineffective until enforcement began last year, strengthening regulations.

On the ground, there is criticism that this regulation is merely bureaucratic. While tobacco advertisements cannot be seen from outside, they are fully visible inside. Since minors cannot purchase tobacco, it is uncertain whether covering advertisements actually helps reduce smoking rates. A convenience store industry official pointed out, "It is questionable whether there is a direct causal relationship between the translucent sheets and youth smoking rates."

The plan by the Ministry of Food and Drug Safety to lower the upper limit for refrigerated food preservation and distribution temperature from the current 10 degrees Celsius to 5 degrees Celsius is also controversial. Currently, the U.S. and Australia apply a 5-degree standard, while Canada and China use standards below 4 degrees. According to research by the Korea Institute for Health and Social Affairs, a 1-degree increase in surrounding food temperature results in a 5.27% increase in food poisoning cases and a 6.18% increase in patients. Based on this, the Ministry of Food and Drug Safety signed a business agreement with Lotte Mart and CU at the end of March and is conducting a pilot project to install refrigerator doors to maintain stable refrigeration temperatures and save energy. They plan to review operational results and expand installation and operation nationwide.

The convenience store industry agrees with the intention to fundamentally prevent food spoilage but points out that it is difficult to bear the costs. Even if the convenience store headquarters share the costs, franchisees inevitably face expenses. A representative from the Korea Convenience Store Industry Association expressed concern, saying, "There have not been many accidents due to food spoilage under the current 10-degree standard, so if this is introduced excessively as a preventive measure, the damage will fall on the franchisees."