Retail giants agree to avoid opening new stores in small cities

The nation’s top supermarket chains voluntarily agreed on Thursday that they will not open any new branches in cities with a population of less than 300,000 until 2015.

Chains of super supermarkets, mid-sized grocery stores run by the nation’s leading retail business groups, also promised to rein in their pace of opening new branches in small cities with a population of less than 100,000 until 2015.

Both supermarket chains and SSMs also agreed to close their shops at least two days per month.

The agreements were made in a meeting with representatives of small retail chains, supermarkets and traditional markets, which was organized by the Ministry of Knowledge Economy in the Palace Hotel, Seoul.

The ministry initiated the first meeting between the two confronting parties, called the “committee meeting to discuss development of the retail industry,” to iron out the conflicts between big and small retailers for future of the industry.

Supermarkets and SSMs have been criticized as their business expansion nationwide and low-price policies dealt a blow to traditional markets and small retail shops in local cities. As a protective measure, local governments have put a brake on business expansion of big retailers by forcing them to close on weekends to protect their local economy. The tension between big retailers and the local governments has been escalating as some big retailers took the measure to court.

Industry watchers took a wait-and-see stance on the issue as the agreements are not binding. In addition, the agreements will not be applied to newly developed branches that are about to be opened.

For instance, Homeplus is expected to push for the opening of its Hapjeong branch, which has completed development. The opening has been delayed due to protests by small retailers in the region.

By Seo Jee-yeon  (jyseo@heraldcorp.com)