SSM

SSM stands for a super supermarket (기업형 수퍼마켓, 대규모 점포/大規模店鋪).

Recently SSMs are the center of disputes in the retail industries in Korea. The Retail Industry Development Act (유통산업발전법) has mandated the head of city or county the coordination of the business hours between large mega-retailers and small and family-run stores in the neighborhood.

Key words
SSM, SME, retailer, discount store, ordinance (조례/條例)

Retail Industry at issue
As Korean citizens' living is getting westernized, they like to drive to large-scale discount stores. Accordingly an increasing number of small stores and traditional markets are forced to shut down.

In pursuit of "co-existence based on shared growth"  - a catchphrase of the Lee Myung-Bak government, the government and law-makers allowed the heads of basic local autonomous entities - city, county, borough - to coordinate the business hours of SSMs. Introduced earlier in 2012, the original ordinance of local governments prohibited large retailers from conducting business on two Sundays a month as part of the government’s policy of curbing the expansion of big retailers to protect small and family-run stores. Some politicians and NGO activists called for the ordinance to be made law so the compulsory closures are strictly enforced.

As a result, three major discount stores - E-Mart, Homeplus and Lotte Mart - shut down 267 of their 368 stores nationwide on the second Sunday of June 2012, while four major operators of SSMs closed 776 of their 1,084 stores.

Lower Court Case
Homeplus in the Gangdong and Songpa districts of Seoul, filed a petition with the Seoul Administrative Court citing illegalities in the implementation of the ordinances and a violation of the Retail Industry Development Act. After considerable deliberations, the Seoul Administrative Court ruled E-Mart, Homeplus, Lotte Mart, GS Retail and Everyday Retail may keep operating on the second and fourth Sundays of each month.

Although it is properly deemed necessary to restrict the operations of large-scale retailors subject to the relevant act, the court said the ordinances were riddled with procedural problems as public hearings had not been undertaken and the opinions of the heads of the ward offices had not been taken into account. However, while the court ruled against the government, it did not say whether the original measure targeting SSMs ran counter to the constitution.

Small & Medium Retailers' Responses
Owners of small and family-run businesses expressed their disappointment with the court ruling which has allowed the nation’s five SSMs to avoid recently imposed operating restrictions. At the meeting at the headquarters of the Federation of Small and Medium Businesses (Kbiz) in Seoul, organizers called for the ruling to be scrapped and a stricter law put in place to regulate mega-retailers run by large conglomerates.

Small business owners have realized that the conglomerate-led retail stores are no longer interested in coexisting based on a policy of shared growth. Small businesses fear they will be forced to shut down if the regulation that compels big retailers to close their stores for two days a month is relaxed.

The Federation of Korean Distribution (FKD) said the court’s decision to invalidate the limited operating hours of the class of retailers called SSMs has exasperated SME owners, whose livelihoods are threatened by large conglomerates.

The five large retailers in the two aforementioned districts opened for business on Sunday after the court overturned the ban. Small and family-run stores at traditional markets opposed the court’s decision, arguing that many are on the verge of going bankrupt as SSMs encroach on their customer bases.