[Supermarket Industry Inspection ④] "Became a Dinosaur While Large Discount Stores Were Tied Up"... 'Food Ingredient Marts' Grow in the Regulatory Blind Spot

10 Years of the Distribution Industry Development Act, 'Balloon Effect' Leads to Rapid Growth of Food Ingredient Marts

"One Signboard, But Split Corporations"

A 'Safe Haven' Free from Mandatory Closures, Store Opening Restrictions, and Business Hour Regulations

In 2013, the government revised the 'Distribution Industry Development Act' under the pretext of protecting traditional markets and alley commercial districts. It was a strong regulation that forced large discount stores and corporate super supermarkets (SSM) to mandatorily close twice a month, banned late-night operations, and restricted the opening of new stores within a 1km radius of traditional markets. More than 10 years later, 'food ingredient marts' that exploited the loopholes in the regulations have emerged as the new predators in the retail market.

The Unrivaled Run of Food Ingredient Marts Fostered by Regulations

While large discount stores and SSMs had their hands and feet tied by regulations, food ingredient marts took over alley commercial districts at a frightening pace. The growth of major food ingredient marts is proven by the numbers.

'Jangbogo Sikjajae Mart' saw its sales increase from 397.6 billion won in 2021 to 450.2 billion won in 2024, and 'Segyero Yutong' also expanded its size from 160.3 billion won to 197.9 billion won during the same period. In particular, 'Central Holdings', one of the operating corporations of 'Mart King', saw its sales more than double in one year from 37.5 billion won in 2023 to 90.8 billion won in 2024. Compared to the stagnant growth of large discount stores during the same period, this shows that food ingredient marts are securing an overwhelming advantage in expanding sales and the number of stores.

"24-Hour Operation and Even Early-Morning Delivery"... The Blind Spot of the Law

The background to the rapid growth of food ingredient marts lies entirely in the 'blind spot of the law'. Under the current Distribution Industry Development Act, a store must have a floor area of 3,000㎡ (about 900 pyeong) or more to be classified as a large discount store and subject to regulations. Food ingredient marts cleverly evade this standard and operate stores under 3,000㎡, thereby escaping all regulations.

Even on mandatory closure days when large discount stores must shut their doors, food ingredient marts can operate openly, and 24-hour operation is also possible. Even 'early-morning delivery' or online delivery, which large discount stores cannot implement due to regulations, can be freely conducted by food ingredient marts regardless of time and day of the week. The regulation restricting the opening of new stores within a 1km radius of traditional markets (registration restriction) also applies only to SSMs and does not apply to food ingredient marts.

"Splitting Buildings and Dividing Corporations"... The Reality of Deceptive Operations

It has been revealed that some food ingredient marts are even mobilizing anomalous expedients to avoid regulations.

The most representative method is 'building splitting'. Under the Building Act, if the floor area is 1,000㎡ or more, it is classified as a sales facility, making site selection difficult. To avoid this, some marts are using a 'trick' where they split and construct the building into two or three blocks, and then connect them with passageways to operate as a single store. On the outside, it is a single massive mart, but on paper, it is equivalent to several small retail stores attached together.

'Corporation splitting' is also rampant. If annual sales exceed 100 billion won, they are subject to the 'Large-Scale Retail Trade Act', creating obligations such as preventing abuse of power against suppliers. To evade this, they establish separate corporations for each branch or disperse the corporations under family members' names.

In fact, in the case of 'Mart King', a famous food ingredient mart in the Seoul metropolitan area, it operates separate corporations for each branch such as Mart King Annyeong, Mart King Gwonseon, and Mart King Buksuwon, and the sales of each corporation are maintained in the 30 billion to 40 billion won range. It was also confirmed that 'Segyero Mart' is dispersing its sales to multiple related companies such as Segyero W Store, Segyero Yutong, and Shine Yutong.

"Protecting Traditional Markets? Only Padded the Pockets of Food Ingredient Marts"

Initially, the purpose of the Distribution Industry Development Act was to revive traditional markets by regulating large discount stores. However, the reality appeared as a 'balloon effect' where the empty spaces left by large discount stores were taken not by traditional markets, but by food ingredient marts.

A retail industry official pointed out, "Food ingredient marts are equipped with parking lots and convenience facilities at the level of large discount stores, yet they are subjected to regulations at the level of neighborhood supermarkets," adding, "As they become the black hole of alley commercial districts, traditional market merchants are complaining that food ingredient marts are scarier than large discount stores."

Voices are growing louder that, even now, realistic institutional reforms are needed for food ingredient marts that have grown bloated amidst the paradox of regulations.