The decline of South Korea’s big-box retail industry is no longer just a corporate story. It is becoming a case study in how e-commerce can dismantle a business model that once dominated modern consumer spending.
Homeplus, one of the country’s largest discount-store operators, has long been viewed through the lens of debt, private-equity ownership and restructuring. But new research suggests its struggles are less about company-specific missteps than about a structural shift in how South Koreans shop.
A report released by the Korea Development Institute (KDI), South Korea’s state-run economic think tank, found that every 1% increase in online spending per consumer is associated with a 0.264% decline in sales at large discount stores. The analysis, based on nationwide Shinhan Card payment data collected between January 2020 and December 2024, provides one of the clearest measurements yet of e-commerce’s impact on the country’s retail sector.
The findings suggest online shopping is not replacing brick-and-mortar retail altogether. Instead, it is selectively weakening the economics of large-format stores while benefiting smaller retailers that are closer to consumers.
According to KDI, a 1% increase in regional online spending corresponded with a 0.221% rise in sales at corporate supermarkets, known locally as SSMs, a 0.324% increase at convenience stores and a 0.356% gain at specialty retailers. Overall offline retail sales also rose by 0.186%.
The data point to a broader change in consumer behavior. Rather than making weekly trips to large discount stores, shoppers are increasingly purchasing groceries, household goods and bulk items online while relying on neighborhood supermarkets and convenience stores for immediate or fill-in purchases. The shopping trip that once justified sprawling suburban retail outlets is gradually disappearing.
That helps explain why Homeplus has become more than a retailer undergoing court-led restructuring. KDI argues that its rehabilitation reflects structural pressures facing the entire discount-store industry rather than problems unique to a single company.
The challenge is likely to intensify as delivery networks become faster and more sophisticated. The institute found that services such as Coupang’s Rocket Delivery have not yet reduced total offline retail spending, but they are already changing shopping patterns. Every 1% increase in online spending was associated with a 0.010% decline in offline purchases per consumer and a 0.023% drop in the number of customers visiting individual stores.
The next competitive threat could come from Chinese e-commerce platforms.
KDI said companies such as Temu and AliExpress could reshape the market further if they establish nationwide logistics networks capable of offering same-day or dawn delivery in South Korea. Such a development would likely intensify competition not only for large discount stores but also for a broader range of physical retailers.
The report also raises questions about whether South Korea’s retail regulations have kept pace with changes in consumer behavior. Large discount stores remain subject to mandatory closures and restrictions on operating hours, while online retailers face no comparable limitations despite accounting for an increasingly larger share of consumer spending.
South Korea has long been regarded as one of the world’s most digitally connected consumer markets, making it a leading indicator of how retail evolves as e-commerce matures. The latest data suggest the industry’s biggest disruption is not the disappearance of physical stores, but the steady erosion of the weekly shopping trip that sustained the big-box retail model for decades.
If that trend continues, Homeplus may ultimately be remembered less as an isolated corporate failure than as one of the first clear signs that South Korea’s discount-store era had reached its limits.
