The South Korean government is considering lifting restrictions on early morning deliveries for large supermarkets to counteract Coupang's dominant market position, though doubts persist about the effectiveness of such measures.
The recent move by the South Korean government, along with the ruling party and the presidential office, to allow early morning deliveries for large supermarkets reflects a strategic effort to combat the monopolistic tendencies of e-commerce giants like Coupang. With the retail landscape dominated by online platforms, lifting delivery restrictions may not sufficiently address the underlying shifts in consumer behavior and market dynamics, particularly in the non-food sectors where traditional supermarkets have lost substantial ground. In the past decade, large supermarkets have seen a significant decline in their non-food item sales, with reports indicating a continuous drop since 2012, raising questions about their competitiveness in the broader retail market.
The article highlights the changing landscape of large supermarkets, noting how their revenue structure has increasingly leaned towards fresh food items, while sales of non-food products have sharply declined. By 2024, the relegation of non-food segments has become so pronounced that food items reportedly account for about 70% of large supermarket revenues. Consumers have been shifting toward online shopping for electronics and clothing amid competitive pricing from open markets and social commerce platforms, which effectively diminish the retail competitiveness of large supermarkets in these categories.
Amid these developments, there are concerns regarding whether regulatory relaxations will indeed act as a viable countermeasure against Coupang's rapid growth, as the latter has predominantly thrived in the non-food online shopping segment. Insights from national data analytics indicate that food and agricultural products constituted a mere 19.2% of the online shopping total transaction value last year, suggesting that the core strength of platforms like Coupang lies outside of the fresh food domain. As the landscape evolves, any substantial recovery in non-food category sales for large supermarkets remains uncertain, leading to speculation about the long-term effectiveness of policy changes aimed at revitalizing their market positions.
