By Kang Hyun-kyung
President Lee Myung-bak signed into effect the “Super Supermarket (SSM)” bill aimed at restricting the opening of chain stores operated by large retailers within 500 square meters of a neighborhood with a cluster of small stores into law, Tuesday.
Lee’s signature came days after the National Assembly passed the pro-small stores measure amid a tug of war between medium-sized retailers, such as Homeplus Express operated jointly by Samsung and British firm Tesco, and owners of mom and pop stores over the regulation.
Under the new law, an area of 500 square meters near a cluster of small stores will be designated as a district where the opening of SSMs is restricted.
The protective measure came years after owners of small stores took a series of collective action against a chain of large retailers after suffering from business losses due to the presence of the latter in their business district.
SSMs are chain stores operated by large retailers, such as E-Mart and Homeplus.
Since E-Mart, Korea’s version of Wal-Mart, first opened a store in northern Seoul in 1993, large retailers have seen rapid expansion and growth in revenue.
The lucrative business encouraged large local and global retailers to jump into the SSM business. By mid-2009, a total of 395 large retailers had been opened.
E-Mart has 119 chain stores nationwide, followed by Homeplus with 112 and Lotte Mart with 64.
The revenue growth, however, began showing signs of declining from 2003 due to heavy competition.
The slowdown has prompted the large retailers to explore a new business area, SSM chain stores.
SSMs, such as Homeplus Express, are smaller than Homeplus but larger than small grocery stores of which the average size is below 660 square meters.
Compared with mom and pop stores, SSMs stock a greater range of products with a wider selection.
Industry experts said SSMs have seen sharp hikes in sales revenue over the past several years. The combined sales records of the retailers in 2003 were 2.06 trillion won and it jumped to 3.4 trillion won five years later.
The presence of SSMs has pushed small stores out of business.
Owners of small shops staged protests, calling for protective measures.
After holding several hearings on the measure, lawmakers outlined the SSM bill. Passing the bill in the National Assembly last week was an uphill battle because the pro-small store measure drew a backlash from the large retailers.