NongHyup's Hanaro Mart launches management reforms amid industry challenges

Amidst growing concerns in the retail sector, NongHyup's Hanaro Mart is embarking on a significant management overhaul. The move comes as the company grapples with declining revenues and widening losses, aiming to revitalize its operations through strategic enhancements.

Last year, Hanaro Mart, operated by Hanaro Distribution and NongHyup Distribution, saw its revenue drop by 3.9% to 2.57 trillion won. The chain's financial performance worsened, with losses increasing from 52.6 billion won in 2022 to 71.3 billion won in the previous year. In response, NongHyup plans to bolster both its online and offline sales channels. This includes expanding its delivery service through partnerships like Coupang Eats and increasing the presence of large anchor tenants.

The reform plan also focuses on strengthening private brand (PB) offerings, such as 'Hanaro Good' and 'Okay Cook,' and expanding sales areas for convenient meals, health, and beauty products. Stores consistently operating at a loss will undergo management diagnostics, with potential closures or repurposing into different facilities. NongHyup emphasizes that these reforms balance profitability with its public service role, particularly in supporting domestic agricultural products and supplying affordable goods to rural areas lacking large supermarkets.

NongHyup highlighted the inherent challenge of maintaining low consumer prices while purchasing agricultural products at fair prices from farmers, which impacts profitability. The company plays a role in boosting agricultural consumption and easing grocery costs through large-scale promotional events, often in collaboration with the government. For instance, during major holidays, Hanaro Mart offered discounts of up to 65% on agricultural products and daily necessities, leading to significant sales increases for items like red oranges and garlic. The company plans further promotional events, including a "NongHyup Day" offering discounts up to 56% on seasonal produce and processed goods.

Furthermore, Hanaro Mart benefits from an exemption from mandatory closing day regulations, as its sales of domestic agricultural, livestock, and fishery products exceed the legal threshold of 55%. NongHyup maintains this is not special treatment, as several of its stores that do not meet the criteria are subject to the same regulations as other large retailers. NongHyup Chairman Kang Ho-dong stated, "We will continue our public service role and strive to become a trusted Hanaro Mart through management efficiency and strengthening business competitiveness."

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We will continue our public service role and strive to become a trusted Hanaro Mart through management efficiency and strengthening business competitiveness.