12 Years of Hypermarket Regulation: Consumers Vanish, Leaving Only Victims of Regulation

It has now been 12 years since the regulations on large discount stores, introduced under the slogan of “reviving traditional markets,” took effect. The tightly woven net of the Distribution Industry Development Act—mandating Sunday closures, banning late-night business hours, and restricting new store openings—has strangled large discount stores, all in the name of “protecting neighborhood commercial districts.” But we must ask again whether these regulations have truly protected traditional markets or served consumers.

The statistics tell the real story. Although sales at traditional markets have risen slightly compared with 10 years ago, their market share has actually declined, while the number of stores and employment have remained stagnant. Even basic modernization—such as installing card terminals, POS systems, and online sales platforms—has not been properly carried out. There has been little self-help effort to strengthen competitiveness; instead, only more regulation has been piled on.

That said, large discount stores did not reap any windfall benefits either. The entire offline retail market has contracted. The market has changed. The competitive landscape is no longer “large discount stores vs. traditional markets.” The real competitor is online retail. Large discount stores, tied down by regulation, lost consumers to online platforms, while traditional markets remained stuck in outdated environments. In the end, no one won, and only consumers’ freedom of choice was infringed.

Since 2020, the COVID-19 pandemic has accelerated this trend. As non-face-to-face consumption became routine, online retail sales surged sharply, and regulations on large discount stores instead became an obstacle hindering digital transformation. Far from protecting traditional markets, they only amplified the side effects of draining vitality from the distribution industry as a whole.

Policy must follow reality. Change has already begun on the ground. Daegu Metropolitan City, for instance, signed agreements with local merchants’ associations and supermarket cooperatives and abolished mandatory weekend closures. Autonomous deregulation by local governments is gaining speed, and the Ministry of Trade, Industry and Energy is also seeking institutional reform through win-win cooperation agreements.

Now it is the National Assembly’s turn to respond. Amendments to the Distribution Industry Development Act have already been pending before the Trade, Industry, Energy, SMEs and Startups Committee for more than four years since being introduced. The core proposals are to exempt online shopping from mandatory closure rules and to lift business-hour restrictions on mail-order sales businesses. Even if a full repeal of the regulations is difficult, gradual reform reflecting consumer convenience and the realities of the retail market is urgently needed.

In policymaking, effectiveness matters more than justification. Regulations that sacrifice consumers’ freedom of choice in the name of “protecting traditional markets,” and even violate the constitutional principle of proportionality, should now be abolished. The only way to revive traditional markets is not regulation, but their own competitiveness. Without merchants’ own efforts at modernization, promotion, and service improvement, no law can protect the market.

The lesson of the past 12 years is clear. Regulations under which no one wins ultimately make everyone a loser. Now is the time to face the realities of retail distribution and shift toward rational distribution policy for consumers. Easing these regulations is the only way for consumers and both online and offline markets alike to survive and prosper.

Gwang yong Go, Policy Director, Center for Free Enterprise (CFE)

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Original title: 대형마트 규제 12년, 소비자 사라지고 규제피해자만 발생

Author: Gwang yong Go

Date: 2025-06-10

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=press&idx=27791