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[Op-Ed] Super Supermarkets

Posted July. 23, 2009 08:47,   


Sam Walton, founder of the world’s largest discount chain Wal-Mart, opened his first store in 1962 in the small city of Bentonville, Arkansas, which had 3,000 residents. He was 44 years old at the time. His low-price strategy allowed him to beat strong competitors such as Sears and Kmart. He cut prices so low, speculation grew that Wal-Mart would soon go under. Walton believed, however, that his low-price strategy was definitely the best method to generate profits, and his idea of profiting through high sales volume and small margins took off.

After Korea opened its distribution market to foreign companies in 1996, Wal-Mart also advanced to the nation. The chain also applied its longstanding low-price strategy. Before the world’s largest discount store chain arrived in Korea, many experts forecast a collapse of Korean distributors because of Wal-Mart. Surprisingly, however, Wal-Mart was forced out of the market after failing to compete against domestic distributors. After beating their global competitors, large Korean distributors such as E-Mart and Home Plus have even expanded their business into neighborhoods in the form of “super supermarkets,” threatening smaller stores. Convenience stores are on every street corner nationwide, but the emergence of super supermarkets could mean doom for mom-and-pop stores. The number of super supermarkets is expected to surpass 700 by year’s end.

Mom-and-pop store owners have protested the super supermarkets. Facing a series of merchant protests, the opening of a Home Plus Express branch in Incheon has been postponed, the first instance due to opposition from small shop owners. President Lee Myung-bak has listened to complaints of small store owners. Legislators have also discussed measures to regulate super supermarkets to protect the self-employed.

Small shop owners say they will collapse due to large corporations. Large companies, however, have responded by saying super supermarkets provide quality products for consumers at low prices and create more jobs. Most provincial and municipal governments regulate super supermarkets indirectly such as regulations on operating hours, noise prevention and urban planning. Conversely, certain regulations have been lifted on such stores. In France, the Chamber of Deputies passed a bill to ease regulations that have prevented super supermarkets from operating Sundays. The passage of the bill ended a 103-year French tradition. Each nation can suggest different solutions for super supermarkets, but one principle is the same: only stores that can provide quality products at lower prices will be left standing.

Editorial Writer Park Yeong-kyun (parkyk@donga.com)