With the abolishment of the Large-Scale Retail Store Law as of Wednesday, large retailers will no longer have to worry about harmonizing their commercial interests with local smaller businesses when establishing or expanding an outlet.
Stores with floor space of more than 1,000 sq. meters are now free from commercial regulations on floor size, closing times, opening days and the number of days they must be closed.
However, those establishing or expanding a large store are now required to become good neighbors and fit into the local environment under the law replacing it.
The new law, which comes into force today, stipulates measures that large retail stores must take to preserve the environment when opening or expanding a business.
Obliged to consider such factors as parking, waste disposal and noise prevention, stores must notify relevant prefectural governments or major cities of plans to establish or expand an outlet.
If the plan fails to satisfy local residents and local governments during the public notification and inspection process, retailers will be required to present voluntary measures or accept recommendations from those governments.
“Some operators have complained about strengthening such social restrictions,” said Kenyu Adachi, head of the Distribution Industry Division at the Ministry of International Trade and Industry.
“But large retailers will have to fulfill social obligations now, in exchange for exemptions from the need of commercial adjustment with smaller entities,” Adachi said.
“They cannot have it both ways,” he added, in the expectation that some large-scale retailers such as supermarket chains will open year-round under the new law.
MITI has issued guidelines on the new law, setting out national standards for large-scale retailers to observe with regard to parking, traffic, noise and waste.
With practical application of the law — unlike the old law — in the hands of prefectural governments or major cities, however, there is some confusion among retailers about how each local government is going to enforce the measure.
While the cities of Sendai and Yokohama have laid down ordinances obliging stores to build parking lots larger than those under the national standards, other municipalities are preparing measures that target smaller retailers who are outside the jurisdiction of the new law.
“It won’t be perfect as long as the new large-scale store law is applied evenly to all local districts,” said Yoichi Harada, an official of Tokyo’s Suginami Ward, underlining the different makeup of commercial-oriented districts such as Shinjuku and Shibuya wards and the residential district of Suginami.
With approval from the ward assembly, Suginami would be able to introduce in July an ordinance obliging retailers with a floor space of more than 500 sq. meters to make agreements with local residents on preserving the local environment, Harada said.
“With local governments using their own criteria to judge environmental and other standards, how the new law will be enforced is opaque to us,” said Satoshi Suzuki, a spokesman for Seiyu Ltd.
In the current fiscal year, Seiyu plans to open 45 stores — 4.5 times as many as the previous period — under the old law, which remains in effect until the end of January for retailers that submitted plans to MITI for new stores by Wednesday.
Some media reports have attributed such a move to retailers’ wanting to dodge the complexity of opening and expanding their outlets under the new law.
“We cannot completely deny such a reason,” Suzuki stressed. “But it has more to do with the fact that we are ready to boost our operations following a restructuring period of three years.”
Meanwhile, the United States, in a report on foreign trade barriers issued in March, said it “shares the concern of many large retailers in Japan over the possibility for abuse or inconsistent application of the new authority by local governments.”
“We see the abolishment of the old Large-Scale Retail Store Law, which has been an issue between our two governments for some time now, as a good thing,” said a U.S. government official on condition of anonymity.
While underscoring the significance of the new law in doing away with competition adjustment for large stores, however, the U.S. official said that local ordinances that may be stricter than the national law “concerns us.”
Hideo Harada, a professor at Ryutsu Keizai University’s economics department, acknowledges that decentralization of authority will occur with the shift from the old to the new law, stressing the importance for neighboring districts to coordinate their efforts to develop a broader local community.
Harada warns that if local governments apply the new law on their own authority without judging it from a wider perspective, some may end up with hollowed-out commercial areas with large-scale suburban stores concentrated in certain districts. He added that businesses must not try to gain an immediate profit.
Deregulation may benefit a majority of consumers by lowering costs and enhancing quality of goods and services, but it may also lead to the neglect of smaller businesses, as well as minority groups of local consumers like the aged, who are less mobile, said Hatsuko Yoshioka, bureau chief of the Japan Housewives’ Association.
To avoid such a worst-case scenario, Yoshioka wants local governments to devise a scheme for better development of the community in cooperation with the central government, urging residents to make the most of the new law and take part in the process of developing commercial areas.