As the first round of high fuel-price subsidies began, large hypermarkets and super supermarkets (SSMs) are once again excluded from the list of eligible spending venues, leaving them disheartened. In particular, even SSMs, which have a high proportion of franchise stores, have been excluded on the grounds that they bear large-corporation branding, reigniting controversy over "reverse discrimination" and policy fairness. With expectations that a situation similar to last year's rollout of the "livelihood recovery consumption coupons" will recur, concerns are growing that the business slump for hypermarkets and SSMs will become prolonged.
According to the retail industry on Tuesday, the proportion of franchise stores among all SSM outlets stood at about 80% for GS The Fresh and 42% for Lotte Super. E-mart Everyday and Homeplus Express also had not insignificant franchise proportions of 20% and 24%, respectively. Despite a substantial number of stores being franchise-based, they were excluded from the list of eligible venues for this round of subsidies. One industry official said, "SSM franchise owners are also the same small business owners, so it is unreasonable that they were excluded from this subsidy's eligible venues simply because they bear large-corporation branding," adding, "Because of this, the prevailing mood is that the business slump for SSMs will deepen further."
The situation for hypermarkets is similar. Amid a prolonged business downturn, the addition of a policy variable is fueling market concentration. Last year, hypermarkets were excluded from the eligible venues for livelihood recovery consumption coupons, dealing a direct blow to their sales. As of August last year, when the coupon effect began to materialize in earnest, hypermarket sales fell 15.1% from the same month a year earlier. Over the same period, SSM sales also dropped 5.9%. This slump was directly reflected in third-quarter results that year.
There are also criticisms that the "trickle-down effect" of consumption stimulus that the government expects is minimal. According to an analysis by the Ministry of Trade, Industry and Energy following last year's distribution of livelihood recovery consumption coupons, the share of hypermarkets in total retailer sales fell to 9.8%, dropping to single digits for the first time ever. This came as a policy variable was added on top of a situation in which their market share was already shrinking due to the spread of e-commerce and regulations such as operating restrictions. The SSM sales share has also been declining year by year, from 2.7% in 2021 to 2.2% last year.
Concerns are also being raised that, at a time when earnings pressure has increased due to high prices and slowing consumption, hypermarkets and SSMs could fall into a structural recession if policy effects are concentrated in specific channels. One industry official said, "While we sympathize with the policy's intent of stimulating consumption, the method of repeatedly excluding specific business formats from eligible venues can cause market distortion," adding, "A more refined design that considers the entire retail ecosystem is needed."
