SEOUL — South Korea’s largest “megamalls” will close down twice a month beginning next year under the government’s latest economic initiative. The mandatory closings are part of a new five-year economic policy set by recently inaugurated President Moon Jae-in, and his administration.
The upcoming closures stand to affect major retail establishments, including Lotte Group’s flagship Lotte World Mall, Shinsegae’s Starfield Hanam and Starfield Coex malls, and other large multibrand shopping malls in South Korea.
In recent years, the nation’s sluggish economy and poor consumer sentiment have been attributed to an unfortunate series of political issues and events including the recent impeachment and scandal of former President Park Geun-hye; the catastrophic sinking of the Sewol Ferry, which claimed hundreds of lives, many of them teens on a school trip, in 2014, and the recent though unofficial tourism ban imposed by China in objection over South Korea’s implementation of the Terminal High Altitude Anti-ballistic Missile system.
Local politicians and policy experts have long been at odds over how best to reinvigorate the domestic economy. With much of the South Korean retail market monopolized by local “chaebols” or family-owned conglomerates, small business owners have been calling for market regulation for many years.
However, critics are unsure whether restrictions on mall opening hours will help boost sales for local small business owners. They argue against the new rules, using the case of the twice-a-month closures major grocery stores and hypermarkets including E-mart, Lotte-mart and Homeplus have been required to implement since 2012.
“There are many arguments about whether bimonthly closures are able to help [the economy],” said Park Heejin, a retail analyst at Shinhan Investment Corp. “When the government applied the same policy to hypermarkets in 2012, it actually destroyed hypermarket’s revenues. Since 2013, 2014, hypermarket sales have been down 10 percent. And I’m not sure about how much it could help mom-and-pop shops.”
A local economics lecturer, who requested anonymity, said bimonthly mall closures will not benefit local businesses. “People shop at places because of the variety of product lines, not necessarily for the sake of buying one thing. By artificially closing shops once or twice a month, it doesn’t bring more demand to mom and pop shops…For instance, if you have to buy things — and if you’re forced to go to mom-and-pop shops, you will have to take two trips rather than one.”
Experts believe the government may need to come up with more strategies to boost the economy. “This is something that is more political rather than an economic solution,” said the economics lecturer. “A better solution would have to be more creative than what they’re doing now. Closing malls twice a month wouldn’t solve the problem now,” he said, adding that consumers instead should be incentivized to shop at small businesses and retailers, rather than forced to go there due to closures.
Lotte Group declined to comment on the issue, while Shinsegae Starfield did not reply to requests for comments.