Open Even When Competitors Are Closed: The Humiliation of Hanaro Mart

[Anchor]

Hanaro Mart is owned by the National Agricultural Cooperative Federation (NongHyup), which operates through its subsidiary, NongHyup Agribusiness Group. This group manages two subsidiaries: NongHyup Hanaro Distribution and NongHyup Distribution. It is reported that the large-scale Hanaro Mart stores located in urban areas have been suffering from tens of billions of won in losses since 2022.

For more details, here is Videomug reporter Yeo Hyeon-gyo.

[Reporter]

1. Four Years of Deficits, Surviving on Bank Loans

NongHyup Distribution reported an operating loss of 30.5 billion won last year, a 40% increase in just one year.

NongHyup Hanaro Distribution also recorded an operating loss of 39 billion won last year.

NongHyup Distribution has borrowed nearly 100 billion won from NongHyup Bank, paying 3 billion won in interest last year alone.

Essentially, the company is surviving on bank loans, and its financial health has turned red. NongHyup Distribution fell into partial capital impairment last year, and its debt-to-equity ratio jumped from 110% in 2024 to 164% in 2025.

The store deficits are not limited to one or two locations; they are a common problem for stores nationwide.

According to data received by Representative Kim Seon-kyo of the People Power Party from the National Agricultural Cooperative Federation during last year's parliamentary audit, the proportion of stores under the two subsidiaries recording losses has been increasing every year.

The figure rose from 13 out of 60 stores (21.7%) in 2020 to 35 out of 62 stores as of August 2025.

This is more than a two-fold increase in just four years.

Why has it come to this?

2. Costs Are Down, So Why the Deficit?

This is the strange part.

It is difficult to attribute the deficit to poor sales because the burden of cost of goods sold has actually decreased.

Let us look at NongHyup Distribution, one of the two subsidiaries.

The ratio of costs incurred when purchasing products, or the cost of sales ratio, dropped from 86% to 82%.

In November 2021, NongHyup Agribusiness Group merged four retail subsidiaries into one, NongHyup Distribution, under the banner of strengthening management efficiency, which enabled bulk purchasing and created a structure where goods could be bought more cheaply.

However, the reason for the deficit lies in selling, general, and administrative (SG&A) expenses.

SG&A expenses include costs for sales and management, such as labor costs, rent, and marketing expenses.

These expenses surged from around 170 billion won just before the merger to nearly 280 billion won last year.

In particular, salary expenses alone jumped from 69.9 billion won to 102.3 billion won.

3. Agribusiness Group Holds Purchasing Power, While Retailers Just Sell?

A bigger problem is that the authority to purchase agricultural products was taken over by NongHyup Agribusiness Group.

[Lee Man-hee, People Power Party Representative: (NongHyup) Agribusiness Group is receiving nearly 27 billion won as a middleman. What is this? Even after receiving this, (NongHyup) Agribusiness Group remains in a deficit state, and Hanaro Distribution and NongHyup Distribution, which were operating well, are now generating massive losses after the merger. Does this mean that such a merger failed to create proper synergy and instead worsened the management situation?]

[Park Seo-hong, CEO of NongHyup Agribusiness Group: Yes, the result is...]

4. Poor Performance Despite Being in a Regulatory Blind Spot

In fact, Hanaro Mart is in an advantageous position.

Unlike other large discount stores, it is not subject to regulations such as mandatory closures twice a month or bans on late-night operations.

This exception was granted because agricultural and marine product sales account for more than 55% of their revenue.

In other words, they are in a regulatory blind spot where they can operate even on days when competitors are closed.

Yet, they have failed to even capture the indirect benefits.

This is a stark contrast to other large retailers that are navigating the challenges of the retail industry by quickly reading consumer trends, utilizing direct distribution, cutting SG&A expenses, and implementing excellent marketing.

[Seo Yong-gu, Professor of Business Administration at Sookmyung Women's University: There is the burden of real estate rent, and they actually need to shut down underperforming stores, but the pace of restructuring is slow. I believe it is urgent to develop private brands that are sold exclusively at Hanaro Mart.]

The fallout from this sluggish performance is affecting farmers.

NongHyup Distribution pays an agricultural support business fee every year in exchange for using the name NongHyup.

This money is used for support projects for farmers, such as revitalizing local distribution.

However, as performance worsened, this funding decreased from 5.1 billion won in 2022 to 4.3 billion won last year.

It seems that because they cannot resolve the deficit, they are cutting farmer support funds first.

Hanaro Mart has successfully reduced costs but is held back by SG&A expenses, and despite avoiding regulations, it has fallen behind in trends. Experts say that fundamental physical improvement is needed, such as restructuring chronically loss-making stores and strengthening purchasing authority.

Reported by Yeo Hyeon-gyo | Video by Kim In-seon | Produced by Lee Mi-seon | Graphics by Jo Seung-hyun and Jeong Yu-min | Produced by Knowledge Contents IP Team
※ Please note: This article was translated by AI and may contain errors.