In this blog post, we will examine how the regulations on large supermarkets currently in effect in South Korea affect local businesses, traditional markets, consumers, farmers and fishermen, and small and medium-sized suppliers, and consider whether these regulations infringe upon the principles of a market economy and consumers’ right to choose.

Why Were Regulations on Large Supermarkets Introduced?

In October 2012, the Seoul Metropolitan Government conducted a first inspection on the 10th and a second inspection on the 14th against Costco for violating the mandatory closing day requirement. At the time, other large supermarkets besides Costco were also operating normally without observing the mandatory closing day—so why was Costco the sole target of these intensive inspections? In April 2012, the Seoul Metropolitan Government implemented operating restrictions on large supermarkets through ordinances issued by each autonomous district, requiring them to observe mandatory closures twice a month. Subsequently, the large supermarkets filed a class-action lawsuit, and on June 22, the Seoul Administrative Court issued a ruling overturning the operating restrictions. As a result, some large supermarkets resumed operations on June 24. Costco did not participate in this class-action lawsuit, but controversy arose over whether it had violated the mandatory closure requirement because it resumed operations at the same time as other large supermarkets. Criticism was raised that the Seoul Metropolitan Government’s targeted enforcement constituted a waste of administrative resources and an excessive exercise of public authority. Conversely, the Seoul Metropolitan Government maintained that Costco had violated the mandatory closure regulations and that the operations of large supermarkets needed to be regulated to some extent.
Currently, the core elements of South Korea’s regulations on large supermarkets are restrictions on operating hours and the designation of mandatory closure days for large supermarkets and medium-sized stores. According to the current Distribution Industry Development Act, heads of local governments may, when necessary, restrict operating hours or designate mandatory closure days for large supermarkets and medium-sized stores; in principle, two days per month must be designated as mandatory closure days. However, through consensus among stakeholders, days other than public holidays may also be designated as mandatory closure days; consequently, some local governments are now shifting these mandatory closure days to weekdays. Meanwhile, the 51 items that the Seoul Metropolitan Government proposed in 2013 as subject to sales restrictions for large supermarkets and corporate-owned supermarkets were, even at the time, merely non-binding recommendations without legal force and were effectively withdrawn following backlash from consumers and the industry. Therefore, when discussing current regulations on large supermarkets, it is necessary to distinguish between the sales restrictions on the 51 items proposed at that time and the current mandatory closing days and operating hour restrictions.

Why should local neighborhood commercial districts and traditional markets be protected?

Those in favor of mandatory closing days and operating hour restrictions for large supermarkets cite the following reasons for the necessity of such regulations. The first reason is to protect local neighborhood commercial districts and revitalize traditional markets. They argue that the decline of neighborhood businesses and traditional markets caused by the price competitiveness of large supermarkets must be prevented, and that the revitalization of these local businesses is essential for the revitalization of the entire local community. The second reason is that small business owners in neighborhood businesses and traditional markets are relatively small-scale operators who need protection from the influence of large supermarkets operated by conglomerates, and that jobs for these small business owners must be maintained or created. The third reason is that if large supermarkets dominate the market, competition will weaken, potentially leading to higher prices. The argument is that if neighborhood commercial districts and traditional markets decline and the market share of large supermarkets increases, these supermarkets could unilaterally raise prices.
Many local governments, including the Seoul Metropolitan Government, have implemented regulations on large supermarkets citing these reasons. However, it is necessary to examine whether it is truly justified to forcibly restrict the operations of large supermarkets in the South Korean market—which is based on the fundamental principles of capitalism and democracy—based solely on these reasons. If we examine each reason put forward by those in favor of regulating large supermarkets one by one, counterarguments can be made against them. First, the claim that revitalizing neighborhood commercial districts and traditional markets is essential for revitalizing local communities emphasizes only a specific aspect among the many elements that make up a local community. A local community is not composed solely of neighborhood commercial districts and traditional markets. Large supermarkets are also an economic space that constitutes the local community, and in some cases, they play a more central role as commercial facilities in the region than neighborhood commercial districts and traditional markets do.
Furthermore, large supermarkets do not necessarily cause the unilateral decline of neighborhood commercial districts. In some cases, the stores located within large supermarkets or the commercial districts surrounding them actually experience increased foot traffic and become more vibrant as a result of the supermarket’s presence. Particularly in small and medium-sized cities outside the capital, large supermarkets and the surrounding commercial districts often form a crucial pillar of the local economy; therefore, operational regulations on large supermarkets could potentially affect the region’s overall economic activity. Around the E-Mart Cheonho branch, located in Cheonho-dong, Seoul, a commercial district centered on small businesses—such as clothing stores, flower shops, and furniture stores—has formed. At the time, local merchants claimed that foot traffic had decreased since the mandatory closure of large supermarkets was implemented, and that on the two days each month when the supermarket was closed, foot traffic dropped even more significantly, negatively impacting their sales. While there are cases where large supermarkets boost foot traffic and contribute to the revitalization of local commercial districts, there are also instances where regulations on large supermarkets harm surrounding businesses.
Although the argument that large supermarkets should be regulated to protect small business owners—who are ordinary citizens—sounds plausible, we must also consider that workers employed at these supermarkets are economic actors who deserve protection as well. Both small business owners and large supermarket employees are people working to make a living; we need to consider whether it is truly reasonable to protect only small business owners in the name of helping ordinary people while turning a blind eye to the potential harm that could be inflicted on workers at large supermarkets. While small business owners in traditional markets or local commercial districts often own their shops or run their own businesses, people working as employees at large supermarkets are workers who earn a living through wages. In particular, if sales decline and staffing levels are reduced due to operating restrictions on large supermarkets, it is the workers employed there who will be directly affected. Even if job losses at large supermarkets result from such restrictions and an equivalent number of jobs are created in neighborhood commercial districts, not all workers will be able to easily start new businesses or find employment there. Since large supermarkets also provide a significant number of jobs, we must consider the possibility that a decline in sales resulting from regulations on large supermarkets could lead to job losses, and it is the working class who may suffer as a result.
The argument that prices will rise due to the monopoly of large supermarkets if local commercial districts and traditional markets decline also simplifies the market structure. Even if both neighborhood commercial districts and traditional markets were to decline, the large supermarket market is composed of multiple companies, and as long as competition among them is maintained, price competition will occur in accordance with the principles of a market economy. Price-fixing among large supermarkets is also regulated under the Fair Trade Act and other laws, and actions by specific companies that restrict competition by exploiting their market dominance are also subject to legal regulation. Therefore, it is difficult to conclude that the decline of traditional markets and neighborhood commercial districts will directly lead to a monopoly by large supermarkets and rising prices. Of course, if competition in a specific market weakens significantly, there is a possibility that problems arising from monopolies or the abuse of market dominance could occur; therefore, rather than imposing blanket restrictions on the operations of large supermarkets, it is preferable to address such issues separately through competition law and fair trade regulations.

Do regulations on large supermarkets infringe on consumer choice?

One of the most critical issues regarding regulations on large supermarkets is determining the extent to which the principles of a market economy and consumer choice can be restricted. In South Korea, where democracy and capitalism are fundamental principles, we must carefully assess whether it is truly appropriate to uniformly restrict the operations of large supermarkets solely on the grounds that they hinder the revitalization of neighborhood commercial districts and traditional markets. The fact that large supermarkets are more competitive than neighborhood shops and traditional markets is not necessarily due to monopolistic practices or illegal conduct. Large supermarkets can secure price competitiveness by simplifying distribution structures and purchasing and selling goods in bulk, thereby achieving economies of scale. Therefore, if consumers can purchase the same or similar products at lower prices, choosing large supermarkets can be viewed as a natural consumer behavior within a market economy. The competitiveness of large supermarkets is not limited to price alone. They often allow customers to purchase a wide variety of products in one place, provide conveniences such as parking and transportation, and offer the advantage of relatively systematic access to information on food origin and expiration dates. In contrast, neighborhood shops and traditional markets may vary in terms of accessibility, convenience, hygiene management, and the level of product information provided, depending on the specific store and location. In the past, concerns were raised that traditional markets sometimes lacked sufficient labeling of food origins or that origins were incorrectly labeled. However, such issues must be evaluated in light of current changes in relevant laws and regulations, as well as improvements in traditional market facilities; not all traditional markets and small shops should be uniformly labeled as unsanitary or untrustworthy. Nevertheless, even though consumers choose large supermarkets after comprehensively considering factors such as price, convenience, and confidence in quality, forcing restrictions on their operations to compel consumers to use other distribution channels could limit consumer choice. It is necessary to reconsider whether it is truly justified to excessively restrict consumer choice and convenience in order to protect the interests of small merchants.
Large supermarkets should not be viewed solely as large corporations engaging in abusive practices or as targets of regulation. Since large supermarkets are a vital distribution channel that receives goods from producers and suppliers, their operations affect not only the supermarkets themselves but also farmers, fishermen, small and medium-sized suppliers, small business owners operating within the supermarkets, and the surrounding commercial districts. As early as 2012, it was argued that major large supermarkets were establishing their own logistics centers and improving distribution efficiency to help boost the profits of producers and suppliers. It is important to consider that, in the process of collaborating with suppliers and producers, these stakeholders also rely on large supermarkets as a vital sales channel. In fact, when the Seoul Metropolitan Government sought to restrict the product categories sold by large supermarkets at that time, groups comprising farmers, fishermen, and representatives of small and medium-sized suppliers who supplied goods to these stores protested, demanding the policy be withdrawn. This highlights the possibility that policies regulating large supermarkets to protect small business owners could, on the other hand, harm farmers, fishermen, and small and medium-sized suppliers. In particular, given that large supermarkets serve as a vital distribution channel for agricultural and fishery products as well as daily necessities, the effectiveness of regulations targeting them should not be judged solely based on the relationship between large supermarkets and traditional markets.
According to a survey conducted by the Federation of Korean Industries at the time, 74.3% of Seoul citizens opposed restrictions on the product categories sold by large supermarkets, and some respondents indicated they would reduce their consumption of those products if the restrictions were implemented. Furthermore, a significant number of respondents indicated that they would not visit traditional markets more frequently even if the product restrictions were implemented. This demonstrates that restricting the product range at large supermarkets does not necessarily mean that consumer spending will shift to traditional markets. Of course, since this survey was conducted by a specific organization in 2013, it cannot be used as data that accurately reflects current consumer perceptions; however, even at that time, there were counterarguments that regulating large supermarkets would not directly lead to the revitalization of traditional markets. Consumers who need to purchase essential items even on mandatory closing days for large supermarkets must seek out other retail channels instead, and if restrictions on the range of products sold are implemented, they may face the inconvenience of having to purchase items they cannot find at large supermarkets at other stores. Today, with the option of online shopping having expanded significantly, it has become even more difficult to assume that restricting the operations of large supermarkets will automatically shift consumer spending to traditional markets.

Why should regulations on large supermarkets be abolished?

We must carefully consider whether it is truly desirable to harm large supermarkets, consumers, farmers and fishermen, suppliers, and surrounding commercial districts that benefit from the foot traffic generated by large supermarkets—all in the name of protecting small business owners in neighborhood commercial districts and traditional markets. While we can fully sympathize with the policy goal of revitalizing neighborhood commercial districts and traditional markets, we cannot definitively conclude that forcibly restricting the operations of specific retailers is necessarily the most effective way to achieve that goal. In particular, the retail market has recently shifted from a structure where only large supermarkets and traditional markets competed to one where various retail channels—including online shopping, convenience stores, corporate-owned supermarkets, and traditional markets—compete with one another. An analysis by the Korea Development Institute (KDI) in 2026 also did not show that, in regions where mandatory closing days for large supermarkets were shifted to weekdays, sales at large supermarkets increased while sales at other offline retail formats, such as traditional markets, consistently decreased. The increase in large supermarket sales was analyzed as being partly related to a shift of some online consumption back to offline consumption. This demonstrates that, in the current retail environment, it is difficult to conclude that operating restrictions on large supermarkets necessarily lead to a shift in consumption toward traditional markets.
Therefore, labeling large supermarkets as unscrupulous corporations that exploit traditional markets and viewing regulations on large supermarkets solely as policies for the working class may be an overly simplistic approach. Workers at large supermarkets, consumers who shop there, farmers and fishermen, and small and medium-sized suppliers are all economic actors participating in the market to earn a living, and their interests must also be taken into account. In particular, the freedom for consumers to purchase the products they want, at the price they want, and at the time they want is a vital value in a market economy. If regulations on large supermarkets fail to effectively protect traditional markets and local commercial districts while causing inconvenience and costs to consumers and other economic actors, the effectiveness of these regulations must be reevaluated. In fact, an increasing number of local governments have recently shifted mandatory closing days for large supermarkets from weekends to weekdays; this trend reflects a growing recognition that we must move beyond the existing one-size-fits-all weekend regulations and instead take into account regional distribution environments and consumer patterns. To protect traditional markets and small business owners while respecting the principles of a capitalist market economy, we must consider policies—such as strengthening competitiveness, improving facilities, and enhancing services—that encourage consumers to voluntarily choose traditional markets, rather than relying on blanket restrictions on operating days. Regulations on large supermarkets that infringe upon the principles of a capitalist market economy, restrict consumer choice, and yet fail to achieve sufficient policy outcomes should ultimately be reconsidered with a view toward abolition or, at the very least, significant relaxation.