Traditional markets and hypermarkets both function as brick-and-mortar retailers, but they are fundamentally different in nature — neither competitors nor substitutes for each other.
The experiences and value they offer are worlds apart. The customer experience at a traditional market differs sharply from that at a hypermarket, and the value consumers perceive from each is equally distinct. Admittedly, the strong subjectivity involved makes it difficult to establish objective metrics for either.
Their service environments — including physical surroundings — are also poles apart. They may appear to sell similar products, but the service itself is different. Consumers perceive and internalize even quality subjectively. The placebo effect is a prime example.
The same applies to price. Price perception, too, is far removed from objectivity. Consumers process the prices set by sellers through their own beliefs, moods and financial circumstances, arriving at very different conclusions.
Even for identical products, the effort required to gather price and quality information differs entirely between a traditional market and a hypermarket. The customer value derived from that process varies from situation to situation and from person to person.
Treating the two as competitors and subjecting them to regulation was therefore misguided — a product of ignorance about the nature of the service industry. The regulation produced no positive effect. The Distribution Industry Development Act is a case in point.
If anything, it has damaged two distinct and valuable retail experiences. Traditional markets offer a uniquely dynamic atmosphere with elements of empathy and play, while hypermarkets provide orderly convenience and a comfortable shopping environment. Both should have been allowed to develop and strengthen their own characteristics.
The two are, in fact, complementary. Counterintuitive as it may seem, they share a heterogeneous, complementary relationship — not a substitutive one. That distinction deserves attention.
A thriving rice-cake shop does not put a bakery out of business. Consider, too, the mutually beneficial relationship between beer and soju.
The approach was simply wrong. What has since been proven is that e-commerce and brick-and-mortar retail are locked in fierce competition. The case of Homeplus, facing a bankruptcy ruling, makes the right crisis response for brick-and-mortar retailers readily apparent.
freiheit@heraldcorp.com
