Eased regulations on major retail stores to intensify competition with e-commerce firms

The Korea Times

The Korea Times

Business

Sat, September 23, 2023 | 01:07

Companies

Eased regulations on major retail stores to intensify competition with e-commerce firms

Posted : 2022-12-28 08:13

Updated : 2022-12-28 08:13

Lotte Mart in Seoul closed on Feb. 28, 2021. Korea Times file

By Kim Jae-heun

As Daegu Metropolitan City announced its plan to allow major retail stores to stay open on weekends, the city governments of Daejeon and Gwangju also began reviewing the possibility of adopting the same policy. The government is also positively discussing ways to allow the stores to continue overnight delivery services on a daily basis including Sundays.

Currently, stores such as E-mart, Lotte Mart and Homeplus, are forced to stay closed on two Sundays every month. They are also banned from delivering online orders between midnight and 10 a.m. Stores in Seoul and the capital area cannot operate delivery services on the second and fourth Sunday of every month due to a local law that is intended to protect traditional markets.

If the regulation is lifted, the major retailers will be able to use their stores as distribution centers and start offering an overnight delivery service.

Currently, e-commerce firms such as Coupang, Market Kurly and Oasis are dominating the online delivery market.

E-mart's logistics center in Gimpo, Gyeonggi Province / Korea Times file

At the moment, the big stores have to establish separate logistic centers to offer overnight delivery, which gives a critical advantage to e-commerce businesses. However, due to low profitability compared to investment costs and intensifying competition in overnight delivery services among e-commerce firms, the major retailers are hesitating to expand their online delivery businesses.

The two retail giants E-mart and Lotte expect to create synergy between their stores and e-commerce affiliates after the government removes the restrictions.

"We do not want to comment on the ongoing debate of whether to lift the ban on major retail stores' overnight delivery and closing on every other Sunday, as the government is still carrying out a review. However, if they are lifted, it will surely help the local retailers get out of a dead end in the current economic slump," a local retail firm official said.

Meanwhile, Daegu Metropolitan City introduced a policy to move the mandatory closing day of the big retailers from Sundays to a weekday, which is influencing other cities to follow suit.

jhkim@koreatimes.co.kr