A government-commissioned report has concluded that allowing large discount stores to offer dawn delivery would have only a limited effect on sales at traditional markets. The report, obtained from the Ministry of Trade, Industry and Energy by the office of Rep. Seo Ji-young of the People Power Party, said dawn delivery by large discount stores "overlaps little with traditional markets, so the direct impact is limited," adding that it instead "has a greater effect on convenience stores and corporate-run chain supermarkets (SSM)." An analysis of areas where SSG.com, a Shinsegae Group affiliate, previously ran a dawn delivery business found that sales fell 4.5% at convenience stores and 4.0% at SSMs, while sales at traditional markets rose 2.3%. The findings run directly counter to the position of the government and the ruling party, which are pushing for a 100 billion won corporate cooperation fund on the grounds that damage to traditional markets would be unavoidable if dawn delivery by large discount stores were permitted.
The report carries significant implications for policy decisions ahead, including the easing of dawn delivery rules and the creation of the cooperation fund. Large discount stores are barred from dawn delivery because of business-hour restrictions introduced in 2012. The rules prohibit them from using their stores as logistics hubs between midnight and 10 a.m. Coupang exploited that gap, using dawn and rocket delivery to build annual revenue approaching 50 trillion won and seize the top spot in the domestic retail industry. Traditional offline powerhouses such as E-Mart and Lotte Shopping, by contrast, lost their competitive edge, and Homeplus, the industry's No. 2, has been reduced to an asset up for sale. This can only be called a self-defeating policy by a government that failed to read rapid shifts in the retail market and consumer patterns, and instead concentrated on excessive regulation and reverse discrimination against companies.
The government and the ruling party should move quickly to revise the Distribution Industry Development Act to permit dawn delivery by large discount stores. They should also take this opportunity to scrap the mandatory closing-day rules, encouraging job creation at large discount stores and allowing more vigorous price competition between online and offline channels. At the same time, they should refrain from the outdated practice of pressuring companies to contribute to a cooperation fund as the price of deregulation. Above all, it is important to shift thinking and break free from the dated ideological frame that treats deregulation as a special favor to large discount stores. A straightforward approach focused on balanced development of the retail industry and consumer benefits is urgently needed. The reality that Walmart and Amazon in the U.S. are competing on online and offline innovation and expanding the size of the market shows that competition, not regulation, is the answer. The time has come to break the unreasonable "retail shackles" that have held companies back for 14 years.