Analysis of the Impact of the Closure Rate on Small Retail Businesses due to the Change of Mandatory Closing Days of Large Discount Stores to Weekdays

Recently, Daegu became the first city in Korea to change the mandatory closing day of large discount stores from Sunday to Monday. This study used a Differences-in-differences analysis to compare the closing rate of small retail businesses in Daegu before and after the change of mandatory closing day with that of Seoul in order to examine the effect of the change of mandatory closing day on the closing rate of small retail businesses in the city. The analysis results by detailed industry specification showed that the closure rate of food/beverage retail and small general retail businesses increased by approximately 8.8% compared to before the change due to the change in the mandatory closing days of large discount stores in Daegu. In addition, the increase in the closure rate was found to be positive in the analysis including medium and large general retail businesses, but it was not statistically significant. When limited to the food/beverage retail business, the increase in the closure rate was 6.6%, which was lower than when small comprehensive retail businesses were included. These results indicate that the impact of the change of the mandatory closing days for large discount stores to weekdays is more evident in the closure of small retailers such as food/beverage retailers and small general retailers than in large and medium-sized general retailers. In addition, in a situation where the overall domestic demand slump continues as it has recently, small retailers are likely to be in a more critical situation, and in this case, when assessing the impact of business regulations, it is necessary to use data such as business closure rate more appropriately than sales.