Bill to allow early-morning delivery has cleared zero committee reviews since February

Passage this year in doubt as small-business groups push back

Sales at the big three hypermarkets fell 4.4 percent annually over five years while online rivals soared

Regulatory overhang seen as a deterrent to potential Homeplus buyers

A notice about mandatory closure days posted at a hypermarket in Seoul. [Yonhap]
A notice about mandatory closure days posted at a hypermarket in Seoul. [Yonhap]

Regulations on hypermarkets are back in the spotlight as Homeplus heads to the mergers and acquisitions market, with critics warning that 14 years of restrictions have eroded the offline retail sector and will make it harder to find a new buyer. The government said early this year it would lift the ban on early-morning delivery by hypermarkets, but the discussion has been going around in circles for months.

As of Friday, five bills to ease hypermarket operating restrictions — all amendments to the Distribution Industry Development Act — were pending in the 22nd National Assembly, according to industry and political sources. The bill introduced by Democratic Party of Korea lawmaker Kim Dong-a, which triggered the government's push for deregulation, was referred to the legislation subcommittee of the National Assembly's Trade, Industry, Small and Medium Enterprises and Startups Committee on May 19 and has sat there ever since. Four months have passed since the referral with no review in sight. "Opposition from small-business groups is so strong that it is hard to say whether a review will even happen this year, let alone whether a bill could pass," one political source said.

The bill would keep existing offline operating restrictions in place while carving out an exception for online delivery, allowing early-morning deliveries during the currently prohibited hours of midnight to 10 a.m. It was introduced in early February on the grounds that the hypermarket operating rules introduced in 2012 — originally meant to protect traditional markets and neighborhood shops — had backfired by benefiting e-commerce companies instead. The ruling party and government agreed on deregulation at a senior party-government consultative meeting held ahead of the bill's introduction. Opposition-party bills also focused on easing the mandatory twice-monthly closure requirement and operating-hour restrictions. Contrary to expectations of smooth bipartisan agreement, small-business groups pushed back and stalled the process.

Hypermarket operating regulations have come up repeatedly during Homeplus's corporate rehabilitation proceedings. Critics argue the rules have weakened the industry's competitiveness independently of the management problems caused by its major shareholder. According to a retail sales trend survey by the Ministry of Trade, Industry and Energy, combined sales at the three major hypermarkets — E-mart, Lotte Mart and Homeplus — fell an average of 4.4 percent per year from 2020 to 2025. That contrasts sharply with the 12.8 percent average annual growth posted by 11 major online retailers over the same period. This year, hypermarkets have recorded year-on-year declines every month except February.

The regulatory environment is likely to act as a further deterrent now that Homeplus has officially put its hypermarket business up for sale. "Even if Homeplus operated 365 days a year, it still would not generate enough to pay off its debts," one retail industry official said. "Who would want to step in when the industry's future looks this bleak?" The government has been quietly canvassing opinion among stakeholders including small-business groups and hypermarket operators, but sentiment is evenly divided.

In the meantime, major hypermarket chains are searching for a way forward. Lotte Mart's Zeta Smart Center, which opened in Gangseo-gu, Busan, in August, is a prime example. The company began making deliveries through its own logistics center, which is not subject to the current regulations. Land acquisition and construction alone cost about 200 billion won ($145 million). According to Lotte Mart, order volume in August, the center's first full month of operation, rose about 30 percent from a year earlier. E-mart has also been running early-morning deliveries in the Greater Seoul area and select other regions through its e-commerce affiliate SSG.com and a separate logistics center.

In an online survey conducted by Now N Survey from Aug. 28 to Tuesday among 960 adults aged 20 and older, 50.7 percent said they opposed the mandatory closure requirement for hypermarkets, while 34.2 percent supported it and 15.1 percent said it made no difference to them. Choi Cheol, a professor of consumer economics at Sookmyung Women's University, said the mandatory closure and operating-hour restrictions had ultimately added to consumer inconvenience without meaningfully boosting small retailers' sales. "It is time to shift direction — away from regulating hypermarkets and toward support that strengthens the advantages of traditional markets and neighborhood commercial districts," he said.


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