Daegu Closes on Weekdays... Will It Spread to Major Supermarkets Nationwide?

Daegu City Mandatory Weekday Closure Agreement
Implementation Expected as Early as January Next Year
Merchant Groups Choose Coexistence with Large Marts
Distribution Industry Watches for Spread to Other Regions

At the Sangyeok Office of Daegu City Hall, mart union members are holding a rally opposing the mandatory holiday change mutual development business agreement to be signed by the 9 districts and counties of Daegu, the Daegu City Merchants Association, the Chain Store Association, and the Supermarket Cooperative.
[Image source=Yonhap News]

[Asia Economy Reporters Yuri Kim and Chunhan Lim] As Daegu City plans to change the mandatory closure days for large supermarkets to weekdays starting next year, attention is focused on whether this movement will spread to other local governments such as Seoul. With growing controversy over the effectiveness of the original intent to revitalize traditional markets and protect small business owners, it is drawing attention to how local governments will promote convenience for residents while fostering coexistence with local small merchants.

According to the distribution industry on the 20th, Daegu City held a ‘Large Supermarket Mandatory Closure Weekday Conversion Promotion Agreement Ceremony’ yesterday at the Sangyeok Office in Sangyeok-dong, Daegu. Representatives from the Daegu branch of the National Merchants Federation, Daegu Supermarket Cooperative, and the Korea Chain Store Association attended and pledged cooperation. The city plans to implement weekday closures for large supermarkets as early as January next year, or by March at the latest, after preparing a win-win plan.

The Distribution Industry Development Act, introduced in 2012, allows local government heads to designate two mandatory closure days per month for large supermarkets through ordinances to protect neighborhood commercial districts and diversify the distribution ecosystem. Based on ordinances set mainly by each district in Seoul, including the six major metropolitan cities, most have designated the second and fourth Sundays of each month as mandatory closure days.

However, some places have set weekdays as closure days through consultations among local governments and merchant groups. Currently, out of 403 supermarkets nationwide, about 100 operate on weekdays off after stakeholder consultations considering local circumstances. Among Emart’s 158 stores, 45 including Gwacheon, Anyang, Pyeongchon, Hanam, Ansan, and Jeju branches close on days other than Sunday. Homeplus has 30 out of 133 stores, and Lotte Mart has 25 out of 112 stores closing on non-Sundays. According to Daegu City, 51 out of 243 local governments nationwide have designated weekdays as mandatory closure days for large supermarkets.

Over the past decade since 2012, the distribution industry has frequently criticized the mandatory closure day designation as an outdated regulation that does not keep pace with changes in the distribution environment. Especially with the rise of the e-commerce market and ‘online grocery shopping’ due to COVID-19, consumers turning to traditional markets instead of large supermarkets have become even rarer. Offline, large-scale food material marts, which are exempt from regulations, have expanded and enjoyed a spillover effect, further intensifying debates over effectiveness.

According to last year’s survey on consumer perceptions of distribution regulations on large supermarkets conducted by the Federation of Korean Industries, only 8.3% of consumers visited traditional markets to purchase daily necessities on large supermarket closure days. More than half (59.5%) said they visited small business stores and surrounding shops classified as small merchants simultaneously when visiting large supermarkets and complex shopping malls. 58.3% of consumers supported abolishing or relaxing the mandatory closure system for large supermarkets on public holidays. Professor Chunhan Cho of the Department of Smart Management at Gyeonggi Science and Technology University analyzed big data on credit card payments and found that payment amounts at surrounding stores decreased by 8-15% on days when large supermarkets were closed compared to open days.

The role of local merchant groups was significant in Daegu City’s push to change mandatory closure days to weekdays. They chose to revitalize commercial districts through coexistence with large supermarkets. The distribution industry views Daegu City’s decision as a positive change and is closely watching whether this trend will spread to other local governments. The government has also formed the ‘Large and Small Distribution Win-Win Council’ to gather stakeholder opinions, raising expectations for future changes. Kyobo Securities estimated that if the mandatory closure days for large supermarkets change from Sundays to weekdays twice a month, annual sales for Emart and Lotte Mart would increase by approximately 300 billion KRW and 170 billion KRW, respectively.

The key is the win-win plan that can bring mutual benefits among local stakeholders and the determination of local governments. Professor Siwol Kim of the Department of Consumer Information at Konkuk University said, “From the consumer utility perspective, it would be good if people can purchase products at low prices at large supermarkets on weekends and enjoy shopping and culture with their families. If there are positive social effects, changes will continue. If opposition from traditional markets is an issue, flexibly changing mandatory closure days to some weekdays and some weekends throughout the year could be one solution.”