Large discount stores and traditional markets

Wagon producers in the U.K. demanded the government impose regulations when cars first appeared in the 19th century. The British government accepted their claims that cars damage roads and carriage horses get alarmed and cause danger in wagon operations, which led to the legislation in 1865 of the Red Flag Act. This law required a man holding up a red flag shall give warnings to pedestrians with the flag, riding a horse or walking at least 55 meters before a car. Provisions also suggested that one car shall have three crew members, and that its top speed be 6.4 kilometers per hour and slow to 3.2 kilometers in urban areas to ensure that it does not run faster than a wagon. In this way, the wagons extended their survival for a bit, but disappeared eventually.

In July 2001, the Korean government banned the operation of shuttle buses for customers by large retail stores to revive traditional markets. Even after this measure was introduced, people instead drove passenger cars to the stores instead of going to the markets. With the capacity to carry a large volume of products thanks to a passenger car, the purchase value per customer jumped 23 to 29 percent. The number of vehicles visiting large stores also increased 80 percent to two-fold, causing severe traffic jams in areas around big stores. More than 3,000 drivers of buses for large stores lost their jobs.

According to a survey conducted by the Knowledge Economy Ministry, autonomous governments have forced large stores to close two days per month, but sales at traditional markets have hardly increased. Sales at certain traditional markets rather declined on days when large stores closed. Expectations that restricting operations at large stores would help revive traditional markets proved to wildly inaccurate. Unlike the results of this survey, another study conducted by the Seoul Metropolitan Government found that 36.5 percent of merchants at traditional markets said sales rose following the regulation on large stores. Are these polling agencies doing their surveys in a way that intentionally justify the needs of the organizations paying for their services?

Merchants at traditional markets are fearful of large stores because the latter supply a wide variety of quality products at cheaper prices to consumers. If authorities block the distribution revolution, only consumers stand to suffer. Fourteen bills obliging large stores to increase the number of days for closure from two to four days per month have been submitted to the National Assembly for deliberation. Even if such bills are approved by parliament, regulating large stores alone will hardly help revive traditional markets. Delaying the introduction of technology and services might be possible, but preventing it altogether is not. Whichever the industry, it can survive only when it transforms itself by adapting to a changing environment.

Editorial Writer Heo Seung-ho (tigera@donga.com)