Retail Industry's Consecutive Business Expansions Raise "Alley Market Infringement and Small Business Protection" Concerns
Industry States "No Overlap with Small Businesses' Markets"... Experts Say "Regulation Is Premature"
[Asia Economy Reporter Jeon Jinyoung] This year’s National Assembly audit is expected to put quick commerce regulations in the distribution industry under scrutiny, prompting the distribution sector to pay close attention.
According to political circles on the 27th, discussions on the quick commerce business are expected to take place during the upcoming National Assembly Industry, Trade, Energy, Small and Medium Enterprises Committee audit next month. The committee has received demands to apply designations such as livelihood-suitable business category, mandatory closing days, and operating hour restrictions to the quick commerce business in order to protect small and medium-sized merchants.
An opposition party official said, "Above all, there is a strong voice from small business groups requesting designation as a livelihood-suitable business category," adding, "This is because there are significant concerns that it could infringe on neighborhood commercial districts." He further stated, "We plan to order an investigation into how much of the sales revenue of distribution companies operating quick commerce services comes from quick commerce profits." The National Assembly Legislative Research Office also suggested in its ‘2022 National Assembly Audit Issue Analysis’ that "it is necessary to consider whether systems protecting the business areas of small and medium enterprises and small merchants can be applied to quick commerce service providers."
The distribution industry is closely monitoring political movements. This is because, beyond Baedal Minjok and Coupang, recently supermarkets and convenience stores have been entering the quick commerce market one after another. Lotte Shopping and Homeplus are providing immediate delivery services that deliver products within two hours of ordering. Olive Young is also operating the ‘Today Dream’ service, and GS Retail plans to launch the ‘Our Neighborhood GS’ application in mid-October, which will integrate existing online and offline services with quick commerce, advancing from its current ‘Udeal Order’ service.
Currently, the National Assembly is discussing ways to apply the Livelihood-Suitable Business Act, which blocks large and medium-sized companies from entering the quick commerce business for three years, the Win-Win Cooperation Act that recommends postponing or downsizing business operations, and the Distribution Industry Development Act, which applies operating hour restrictions and mandatory closing days similar to those for supermarkets.
The industry believes that the quick commerce market does not overlap with small merchants and commercial districts, and that ways to coexist before regulations are implemented can be found. A distribution industry official said, "No small merchants have entered the quick commerce business. It is simply a structure where large companies compete with each other," adding, "If regulations are imposed on this after restrictions on large supermarkets and department stores, it would essentially mean telling the distribution industry not to operate."
Experts also hold the view that regulation is premature. Professor Jeong Yeonseung of Dankook University’s Business Administration Department said, "With offline demand increasing due to the endemic phase, quick commerce is expected to slow its growth in the long term," and pointed out, "In this situation, bringing out the regulation card is premature."
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