Large-scale supermarkets' early-morning delivery service remains 'idling' for six months... small business owners oppose, industry sighs

The plan to allow early-morning delivery by large supermarkets, which the government and ruling party announced in February this year, has been idling for over six months. Small business organizations strongly oppose it, while the large supermarket industry also draws the line, calling the government's compromise proposals such as establishing a fund excessive demands. Pessimistic views are emerging that legislation within this year will be difficult amid opposition from stakeholders.

According to relevant industry sources on the 31st, ministries including the Ministry of Trade, Industry and Energy and the Ministry of SMEs and Startups reportedly presented alternatives during a meeting with large retailers last month as a trade-off for easing restrictions on early-morning delivery by large supermarkets. These include establishing a mutual cooperation fund of about 100 billion won and limiting sales of fresh foods priced at 10,000 won or less during early-morning delivery. Additionally, it was reported that the Korea Supermarket Cooperative Federation recently requested support for neighborhood convenience stores to provide grocery delivery through local government public delivery apps as a condition for amending the law.

Large retailers operating large supermarkets and store-type supermarkets (SSMs) maintain that they cannot accept such proposals. A representative of a large retailer stated, "Until now, before opening new large supermarket or SSM stores, we have implemented various support measures including mutual cooperation funds and market facility improvements through consultations with local merchants and local governments." He added, "In this situation, it is unreasonable to demand acceptance of large-scale fund establishment and restrictions on delivery conditions as a compromise for allowing early-morning delivery by large supermarkets, which still lacks clear profitability."

The recent push in the ruling party to legislate restrictions on early-morning delivery work also places a heavy burden on the industry. Democratic Party of Korea lawmaker Park Hong-bae introduced a partial amendment bill to the Industrial Safety and Health Act and the Life Logistics Service Industry Development Act, which limits night work for early-morning delivery to a maximum of 10 hours per day and 48 hours per week.

For large supermarkets to provide early-morning delivery services, massive investments are required to build additional logistics centers, secure more delivery vehicles and drivers, and hire new personnel for night shifts. Furthermore, if large-scale fund contributions and regulations on working hours for early-morning delivery workers are added, the corporate burden will increase. A company representative who requested anonymity said, "If we have to accept these conditions, it would be better to simply maintain the current system."

In addition, retailers oppose ideas such as supporting quick commerce (rapid delivery) through public apps and selling wholesale prices to small business owners as part of mutual cooperation proposals.

Given such unnecessary controversy and costs, the consensus among the large supermarket industry is that regulations on mandatory days off should be normalized first rather than allowing early-morning delivery.

Industry analysis suggests that if the mandatory closure of large supermarkets is fully abolished and made voluntary, overall sales could increase by about 10%. By voluntarily setting closure days for weekdays with fewer customers, waste rates of fresh foods can be reduced, and labor costs as well as heating and cooling expenses can be saved, further improving store operational efficiency.

Easing restrictions on mandatory closure days could also pave the way for Homeplus, a large supermarket facing bankruptcy (liquidation) risks, to recover. At the beginning of last year, when Homeplus applied for emergency corporate rehabilitation, it stated that "mandatory closure regulations resulted in annual sales losses of about 1 trillion won."

Small business organizations also oppose the legislative amendment. The Korea Federation of Small Merchants and Self-Employed Business Owners pointed out, "If large retailers offer early-morning delivery, small business owners will lose their entire regional distribution networks that have been built over decades." In May, the Small Business Alliance, the National Merchants' Alliance, and the Korea Supermarket Cooperative Federation issued a joint statement saying, "If the National Assembly forces through the bill allowing early-morning delivery, we will immediately file a constitutional complaint with the Constitutional Court."

As a result, there are also pessimistic views that amendments to relevant laws within this year remain uncertain and will ultimately fail. Industry observers interpret that the plan to allow early-morning delivery by large supermarkets was not originally designed considering the retail industry landscape but rather emerged as a move by the government to counter e-commerce giant Coupang after the data breach incident at the end of last year, leading to policy misalignment with regulations on working hours for early-morning delivery workers.