Supermarkets -v- the People?

It has been bothering me since about the time it has been instigated. It’s a simple thing that shouldn’t really get me agitated as it has very little effect on me, and in many respects it is a good principal to take. It’s just that I think it’s the wrong step and I don’t think it really solves any problems, only encourages more populist resolutions to complicated social and economic problems.

What am talking about? Sunday closing for the so-called discount stores in Korea.

Now lets establish some terminology first.

“Discount stores” are what major supermarket chains are called in Korea. These include E-Mart (part of Shinsaegae international), Homeplus (owned by Tesco, the second largest supermarket company in the world), and Lotte Mart, which are the biggest ones.

“Sunday closing” is a government regulation which has called for all “discount stores” to close on two Sundays a month, or in some cases two Wednesdays a month. The reason for this is because they were blamed by smaller businesses for taking away too much business from smaller shops and businesses which were nearby.

Now that we understand this, allow me to explain why I find this to be bothersome.

To begin with there’s the obvious inconvenience of wanting to buy something that the major supermarkets stock. I personally haven’t been overly bothered by this on many occasions, and I’ll admit that the one time it really did get to me, and is probably where the idea for this blog post came from, was on a nice Sunday afternoon when I decided to stop by Yeongtong Homeplus and pick up some tasty foreign beer.

I fancied a few warm cans of something elaborate and I was looking forward to the painstaking decision I would have to make in the aisles. When I came to the front of the supermarket the shutter was pulled down and there was a big yellow banner acorss it explaining, I imagine, that it wasn’t their fault I couldn’t buy my beer, blame the government.

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I don’t doubt that at this moment you’re thinking I’m some crazed anti-government vigilante who feels the world is against him, but this is not the case. I am not going to go into why I didn’t want Korean beer either, but if you’ve been in Korea long enough, you’ll understand. The way I see it is that as a consumer we’re being forced to buy things we don’t want to buy when there are better alternatives available.

I’m all for buying from the little guy, believe me, and I would happily choose the alternative over a major mulitnational blood sucking vampire such as Tesco any day of the week. But I’m also a consumer who has grown accustomed to buying food and products that meet a certain standard, and there’s also the added bonus of liking a bit of variety in my life also.

But there’s a little more to it than that.

One of the arugments put forward for Sunday closing was that the prices of the major supermarkets were suffocating the smaller businesses. But if you’ve spent any amount of time in the supermarkets, you can’t really argue successfully that they are in fact ‘discounted’ prices. Yes there are some discounted goods, but really can you say they are slicing a hole in the belly of the competition and watching them bleed dry on the streets? No. Maybe a pinprick would be a more apt comparison.

There is more to this picture than just prices, its the very nature of competition and the lack of innovation in the realm of small businesses. Take smaller supermarkets for example. What do they sell that would make you want to choose them over the major supermarkets? Nothing. In fact that lack of variety and bog standard middle-to-bottom of the line brands in stock are in my opinion a turn off, especially to young and middle sized families, the kind of people who go into a supermarket and drop 200,000 won in a weekly shop. Other than being a place where you can pick up something urgently in case you run out, I struggle to see what other function they can serve. Of course across the world these smaller shops suffer from the same plight, so it’s not only a Korean problem.

Before this situation with supermarkets came to light, it was another issue raised by smaller restaurants who again complained that the supermarkets where threatening their business. Around 2010 or 2011 Lotte Market announced they were selling fried chicked for around 5,000 won per portion. Compare this with the standard delivered variety costing over 10,000. You can imagine why the fried chicken restaurants went up in arms over this. Not long after this E mart copied them by selling jumbo pizzas at cut prices, and again the pizza shop fraternity went baloobas. In the end the government jumped in and put a stop to this opportunism by the considerably wealthier and resourceful supermarkets by putting a cap on the number they could sell every day.

If we take a look at the pizza and fried chicken places around Korea you can see the problems already, as there are already too many. To the average armchair enthusiast they seem to be a get rich quick scheme which doesn’t seem to be such a hot ticket any more. Pizza places seemed to be the next to follow, and recently I’ve noticed a surge in tteokboki restaurants – I suppose it depends on what’s being promoted the most at whatever franchise fair people end up going to with a sack of inheritance.

*This video will give you an idea of the problems with the fried chicken business in Korea

The propenderence of fried chicken and pizza franchises, to name a few, is a key ingredient in understanding where I’m coming from. I see that these clearly point to a lack of much needed innovation in the small business sector.

For example, if you have all your little supermarkets which are competing against E Mart and Tesco change their stock to sell organic or direct from farm fruit and veg, or high end products, or homemade/locally produced condiments (you know the kind of stuff I’m talking about) you’ll not only encourage people to shop there you encourage the wider national agricultural economy to prosper. This is just an example. Easier said than done I know.

Another avenue is to really go out of your way to provide excellent service. Take camera shops for example. If you go into a camera shop, the guy selling you the stuff is a photographer, and knows all about what you are looking at. Invariably they throw in all sorts of others freebies like bags, memory cards, and other things. Of course the supermarkets aren’t the threat to these people’s livelihood. Their situation is even more serious because they have to compete against the internet.

For the most part a lot of the people who own these places are older, don’t have a lot of money, and really lack the inclination to innovate. Perhaps though they could lease out their premisis to someone with the inclination to innovate. Retail rents are extraordinary at the best of times, but if they could do a deal where the older owner keeps his deposit down as kind of insurance while the younger person pays the rent and some, or something to that effect.

I’ve heard before that a lot of these places are only kept open by some older people because they don’t really have anything else to do, so you know, they keep plugging along. This is mere speculation of course as there are undoubtedly other social issues which may be at play which I’m unaware of.

Regardless, the main thing is that the business is busy and the people involved are all making money. I know that this will not be something that will not happen overnight, and I know that in many circumstances it will not happen at all.

Populism and complaint to the nanny state will continue on as before. If a little innovation were to come it needs to be encouraged by those in a position to do so. There’s no reason why people who are already burdeoned with inexplicably high rents need to suffer because no one wants to buy what they are trying to sell. But at the same time, if no one really wants to buy it perhaps its worth considering what it is for sale.

There is so much room for growth in Korea, despite what people might think, but it is on a micro scale. Large scale development has polarised the economy and increasingly society. If a little vision were employed perhaps we could find ourselves living in new neighbourhoods which were welcoming to all our tastes.

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3 thoughts on “Supermarkets -v- the People?

  1. the thing that irks me about the “shut down once or twice a month” thing is that it doesn’t change anything — the entire system is still set up, structurally, to crowd out the little guy, and forcing the big guy to shut down two days a week is nothing but a band-aid solution that doesn’t address the macro-level advantages the big guy has over the little guy in Korea.

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    • Right. Perfect example in Yeongtong where we’ve a huge Homeplus across the road from a huge Lotte Market, and five minutes down the road is an E Mart. One of these at least is always open. I think that in general whichever genius crafted this piece of work forgot to take into account that people have cars.

      That being said I’m happy for the workers here because at least they can be guaranteed two weekends off a month, and that’s saying something. I worked a lot in retail before, durong, and after college and weekends are definitely a luxury.

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  2. I like your insight and ideas…they are quite sound. I have an example (shocking, I know) there is a sporting goods store, small and has been in my area for a very long time. They have great stuff, well made for water ski, snow ski, biking, running you name it. Across the street they built a DICKS SPORTING GOODS. it’s huge, obnoxious and I am sure they can sell everything that Sports LTD sells, and for less. I am thankful for the jobs this store brought to our town, but…..I hope the loyalty to the small shop can keep them alive. I can name at least 10 other Large chain stores that have driven the small guys out of business. but on the other hand, everyone also needs a place to go where they can save money. I am torn. I can happily say we can buy beer, wine or alcohol any day of the week at any store. I do refuse to go to BEVMO….I am staying away for one reason….it’s a silly ass name. Cheers!!!

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