More local councils, governments to restrict big stores to protect smaller onesRetail giants are under growing pressure from local governments seeking legal action to cut their operating hours as part of their efforts to support small retailers and moribund traditional markets.
Jeonju, the largest city in North Jeolla Province, was the first to approve an ordinance aimed at reducing large discount stores’ business hours on Tuesday.
After a revision to the Distribution Industry Development was passed last month, some city governments are considering forcing large discount chain stores and “super supermarkets” to close one or two days a month and not to do business from 11 p.m.-8 a.m.
More cities and counties are expected to take similar action as the April general elections are approaching and political parties try to court voters.
The total 25 district offices in Seoul are also reviewing ordering retailers to shut their doors one or two times every month and to ban 24-hour operation.
Discount stores in violation of the new policy could face fines of 1 million won up to 30 million won, of Seoul Metropolitan Government said.
In Seoul, there are 64 discount chains and 267 SSMs.
Major retailers, however, are resisting the forced closing, citing inconvenience to shoppers and the threat to workers’ jobs.
Representatives of the nation’s top three chains stores E-Mart, Home Plus and Lotte Mart are making last ditch efforts for revision in a series of meetings with government officials.
Industry watchers say that their bigger concern may be a possible reduction in profits.
In 2011, the combined sales at the top three chains amounted to 36.8 trillion won. Industry sources predicted that they could see about 200 billion won in losses if they have two closed days monthly.
“Grocery sales will be hit directly. Most of the fresh items should be disposed of if they are not sold before off days,” said an industry source said.
Meantime, some critics expected no dramatic changes, saying that consumers would change their weekend shopping day following the new rules, while retailers also would see a decrease in labor costs.
“It’s difficult for us to predict the real effect of forced closures for now,” another industry official said. “Amid recent political discussions to put more pressure on conglomerates, we are very careful not to face a bigger backlash.”
By Lee Ji-yoon (
jylee@heraldcorp.com)
