Policy on small merchants and enterprises is a challenge for any government. Their businesses are often the last to enjoy the benefits of an economic recovery. On Sept. 7, the government announced a plan to help small businesses and merchants, desperately wanting to revive conventional markets and mom-and-pop shops. The plan includes ideas like using big data and encouraging the consumption of local agricultural products grown within a 50 kilometer (31 miles) radius. The ideas are certainly innovative, but their actual benefits are doubtful.
Most of the merchants in locals markets are old and unfamiliar with smartphones and tablet technology. The financial resources needed to adopt information and communication technology have not been readied. The officials say that the budget is not a concern since private corporations like SK Telecom and KT will be involved. But that makes the government look like it is just following a campaign by the telecommunication companies to revive traditional markets.
The plan to use local food also cannot be implemented easily. The local food program is based on daily supplies and daily consumption, but even large corporations cannot afford this because of issues such as maintaining freshness and securing a distribution network. The government plan assumes that processing, packaging and delivering orders in a day is possible with government-sponsored supermarkets and distribution centers. But 613 supermarkets that receive assistance from the government have already closed. It is questionable whether they can bring fresh produces from the farms in a day.
Merchants are not raving about the plan either. The government is spending 3 trillion won ($2.79 billion) on modernizing traditional markets, but merchants are more concerned about rent increases. But restricting or banning rent increases could turn those markets into slums.
What we need to recognize is the sad truth that consumers are increasingly avoiding traditional markets. Despite limiting business hours of large supermarkets and requiring them to close on certain days, supermarkets enjoyed a 19 percent increase in revenue compared with the previous year. Despite a variety of plans to help local markets, they suffered a 4 percent decline in revenue.
While the government provides a variety of support, the fundamental drawbacks of those markets, such as a lack of parking spaces and inconsistent prices, have not improved. In other words, any useful plan to help traditional markets and small businesses depends on bringing back their customers. Rather than thinking about coming up with support plans for those merchants, policy should focus more on how to win back customers. Without this principle, the plans to boost mom-and-pop stores and traditional markets will be neglected by both merchants and customers.
