Hanaro Mart's Humiliation: Struggling Despite Operating When Competitors Are Closed

[Anchor]

Hanaro Mart is owned by the National Agricultural Cooperative Federation (Nonghyup), with its subsidiary, Nonghyup Agribusiness Group, operating two sub-subsidiaries: Nonghyup Hanaro Distribution and Nonghyup Distribution. These large-scale Hanaro Mart outlets located in urban areas have reportedly been suffering from tens of billions of won in losses since 2022.

Yeo Hyeon-gyo from Video Mug has the details.

[Reporter]

1. Four Years of Deficits, Surviving on Bank Loans

Nonghyup Distribution recorded an operating loss of 30.5 billion won last year, a 40 percent increase in just one year.

Nonghyup Hanaro Distribution also reported 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.

Effectively, the company is surviving on bank loans, and its financial health is flashing red. Nonghyup Distribution fell into partial capital impairment last year, and its debt-to-equity ratio jumped from 110 percent in 2024 to 164 percent in 2025.

The deficit is not limited to one or two stores; it is a common problem for outlets nationwide.

According to data provided to Representative Kim Seon-kyo of the People Power Party by 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 percent) in 2020 to 35 out of 62 stores in August 2025. This is more than a two-fold increase in just four years.

Why has it come to this?

2. Why the Deficit Despite Lower Costs?

This is the strange part. It is difficult to blame the deficit on poor business alone, as the burden of cost has actually decreased.

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

The cost of sales—the proportion of expenses incurred when purchasing products—dropped from 86 percent to 82 percent.

In November 2021, Nonghyup Agribusiness Group merged four retail subsidiaries into one, "Nonghyup Distribution," under the banner of "strengthening management efficiency." This enabled bulk purchasing and created a structure where goods could be bought at lower prices.

However, the deficit persisted due to "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 an intermediate margin of nearly 27 billion won. 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 merging. 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, as a result, that is...]

4. Poor Performance Despite Being in a "Regulatory Blind Spot"

In fact, Hanaro Mart is in an advantageous position.

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

This is because it received an exemption due to agricultural and marine products accounting for more than 55 percent of its sales.

It is essentially in a "regulatory blind spot," able to operate even on days when competitors are closed.

Yet, it failed to even capitalize on this indirect benefit.

The situation is vastly different from other large retailers that are overcoming the waves of the retail industry by quickly reading consumer trends, utilizing direct distribution, cutting SG&A expenses, and employing excellent marketing despite regulations.

[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 close 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 impact of this sluggish performance is hitting farmers.

Nonghyup Distribution pays an agricultural support business fee every year for the right to use the "Nonghyup" name. 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.

Essentially, because they cannot resolve the deficit, they are cutting support funds for farmers first.

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

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