Lotte and Shinsegae are dawdling over their drugstore business amid criticism that conglomerates are entering it to circumvent regulations against large discount stores and supermarket chains.

Lotte Group has delayed the opening of its first drugstore by a month to late April or early May, saying it hasn’t decided on the name yet.

Lotte set up a taskforce last year under Lotte Super to prepare the drugstore business, but has continued to postpone its schedule upon unwelcome attention as exorbitant expansion by large companies is seen to hurt mom-and-pop stores.

Shinsegae opened five Boons drugstores last year in Uijeongbu of Gyeonggi Province, Busan’s Marine City and Seoul’s Gangnam, Myeong-dong and Hongdae, and so far has no plans to open more.

“We are still in the process of exploring demand through our five stores in major shopping districts. We are unable to disclose sales figures yet,” said Kim Joo-hee, spokesman for Shinsegae E-mart which runs Boons.

Shinsegae is considering a “shop-in-shop” policy in which Boons shops are placed within some E-mart stores.

E-mart, currently under fire for obstructing its employees from organizing unions, has been walking on eggshells for fear of bad press at a time of heightened vigilance against irregularities by large firms.

The prosecution, eager to live up to the Park Geun-hye administration’s strong pitch for tougher sanctions against unfair practices by big firms, grilled Shinsegae Group heir and vice chairman Chung Yong-jin a month ago for 12 hours over whether he ordered subsidiaries to back its affiliate bakery business, previously controlled by his sister.

Both Lotte and Shinsegae run large discount store chains Lotte Mart and E-mart as well as smaller “super supermarket (SSM)” chains Lotte Super and E-mart Everyday which will be prohibited by law from opening before 10 a.m. and forced to close on at least two days such as Sundays or holidays each month, starting April 23.

Boons sells mostly beauty products just like CJ Group’s Olive Young, which pioneered the local market for health and beauty store chains, or drugstores that do not sell drugs.

GS Watsons and Boons entered the market after Olive Young, which opened its first shop in 1999, thrived from around 2009, but failed to challenge the frontrunner.

The size of the drugstore market in Korea is estimated to be around 500 billion won ($461.4 million).

Olive Young plans to open its first overseas store in Shanghai in the first half of this year and expand to Southeast Asia.

By Kim So-hyun  (sophie@heraldcorp.com)