As discussions grow about the need to regulate grocery stores just like big supermarkets, there are calls for a precise regulation of the actual operations that are being conducted through loopholes. In some regions, cases have been confirmed where stores licensed as direct sales centers for agricultural and livestock products are effectively operating as grocery stores.
According to a report by ChosunBiz on the 24th, a grocery store in Yeosu, Jeollanam-do, was approved by local government as a direct sales center for agricultural and marine products and is selling not only agricultural products like rice and vegetables but also various manufactured goods.
Direct sales centers for agricultural and marine products are facilities established to enhance producers’ incomes and improve distribution efficiency. They are subject to the 'Act on the Distribution and Price Stabilization of Agricultural and Marine Products', but this law does not clearly define the items that can be sold. The Ministry of Agriculture, Food and Rural Affairs, the governing body, stated that "it is difficult to provide administrative guidance to restrict the sale of manufactured goods due to the lack of specific details about the items that can be sold."
The reason these loopholes are exploited is that they allow stores to operate under relatively simple licensing procedures while avoiding area restrictions. Grocery stores do not have a legal definition, and they refer to food distribution specialized stores that handle groceries and are between 1,000㎡ and 3,000㎡ in size.
Receiving a license as a direct sales center for agricultural and marine products allows securing a large sales area, and it also bypasses procedures such as traffic impact assessments and commercial area impact assessments required when opening a big supermarket.
Small business owners are protesting against the practice of selling manufactured goods using direct sales center licenses following the problem of 'fragmenting stores' that had been identified as a vice of grocery stores. They argue that selling manufactured goods in a direct sales center established for farmers is contrary to the purpose of its establishment.
In reality, across the country in cities like Iksan and Gunsan in North Jeolla Province, as well as Suwon and Pyeongtaek in Gyeonggi Province, grocery stores that effectively qualify as big supermarkets are operating by connecting three to four stores of 1,000㎡ size. Each store is registered as a retail store, thus evading regulations under the Distribution Industry Development Act and the Large-Scale Distribution Business Act, which applies when annual sales exceed 100 billion won, avoiding mandatory two days of closure and limitations on operating hours each month.
A store owner in a grocery store said, "The grocery store has become a target because of those operating fragmented stores, and now there are even places operating that were approved as direct sales centers for agricultural and marine products," and added, "It is an administrative error by local governments that they are not subject to the Distribution Industry Development Act."
Some grocery stores are also using the trick of changing operators annually to avoid regulations that restrict the use of local gift certificates when annual sales exceed 3 billion won. Even if the annual sales exceed 10 billion won, if the operator is changed the following year, they can be classified as a new store and continue to receive local gift certificates.
A representative from the Korea Federation of Micro Enterprise (KFME) said, "Grocery stores are absorbing commercial areas like a black hole in regulatory blind spots," and emphasized, "We must eradicate the loopholes that disrupt the ecosystem in order to compete and grow together."
Recently, lawmakers are preparing a bill aimed at regulating loopholes, such as conceptualizing grocery stores and operating them by dividing buildings. An official from the Democratic Party of Korea noted, "We are currently looking into the overall issues, including building fragmentation and changing operators annually."