Effects of Large Distribution Firms on the Number of Small Retail Stores: An Empirical Analysis (in Korean)

This study examines the effects of large discount stores and super-supermarkets (SSMs) on the number of small retail establishments, particularly small village supermarkets and small grocery stores in conventional markets, through an empirical analysis using regional panel data on various types of retail establishments for the 2000-2011 period. The empirical results indicate that one additional large discount store in a regional retail market tends to produce a 5.3% decrease in the number of small village supermarkets, a 4.5% decrease in the number of small grocery stores, and a 3.0% decrease in the number of all retail establishments. Similarly, one additional SSM tends to produce a 1.64% decrease in the number of small village supermarkets and a 1.82% decrease in the number of small grocery stores. On the other hand, these effects were mixed when seven metropolitan cities were excluded from the analysis. Finally, the effects of SSMs on the number of all retail establishments were not only mixed but also ambiguous. In sum, the entry of large discount stores and SSMs into a regional retail market led to the large-scale exit of small village supermarkets and small grocery stores. These findings closely reflect recent efforts by government agencies to strengthen their regulatory oversight of large distribution firms.