The government's plan to exclude fresh food from hypermarket dawn delivery services is aimed at weakening opposition from small business groups, but the half-measure faces resistance from all sides.
Fresh food accounts for nearly 50% of hypermarket sales. Excluding it would significantly reduce concerns about "neighborhood commerce infringement" from dawn deliveries. However, small business groups remain opposed while retailers warn the restriction would make dawn delivery operations unviable.
According to the ruling Democratic Party of Korea on the 24th, the Ministry of SMEs and Startups proposed excluding fresh food from dawn delivery items as part of a coexistence plan to allow hypermarket dawn deliveries.
"Major concessions were needed to persuade small business groups," said one Democratic Party lawmaker. "If fresh food is excluded, small business groups may accept this as a genuine coexistence effort."
Another lawmaker noted, "Although a high-level government-party meeting announced the push for hypermarket dawn deliveries, internal party opposition has blocked progress. The government made this bold proposal to counter Coupang."
The government is also proposing expanded contributions to coexistence funds, with hypermarkets contributing 0.5-1% of increased operating profits from dawn deliveries. Additionally, collaboration between hypermarkets and small merchants using distribution networks is under review.
Despite these efforts, small business groups maintain their opposition. Oh Se-hee, a Democratic Party lawmaker and former head of the Small Business Association, said, "The industry's position is that compensation measures are needed since dawn deliveries will reduce sales. Traditional markets and small businesses are now worrying about survival five years from now."
Retailers called the fresh food exclusion "a hollow measure." Last year, fresh food accounted for 40% of sales at both Lotte Mart and Emart. Homeplus reported fresh food comprised 86% of its online grocery sales as of August last year.
"Most consumer demand for dawn delivery is concentrated on food items including fresh products," said one industry official. "Excluding these makes it difficult to expect any real effect from revising the distribution law."
Industry sources also warned that fresh food drives "associated purchases" of processed foods and daily necessities. Without it, consumers may avoid hypermarket dawn delivery services entirely.
"If customers wanting one-stop shopping cannot order fresh food and other products together through dawn delivery, convenience disappears and there's no reason to use that platform," another retail official said.
Some observers suggest hypermarkets may abandon dawn delivery operations even if permitted, as operating stores and deploying staff during early morning hours may prove unprofitable without sufficient sales volume.
"No store would readily operate dawn deliveries under these conditions," an industry source said.
Given the wide gap between small business groups and retailers, government mediation is expected to take considerable time. A ruling party official said, "With the June 3 local elections approaching, pushing hypermarket dawn deliveries carries significant risk. Final agreement will likely come after the election."