Summary of Key Points
The contraction in the automotive industry has led to a large number of 4S stores remaining idle. Shi Chunming, a businessman in the clothing supply chain sector, transformed an idle 4S store in Anqing, Anhui, into a warehouse-style clothing outlet that serves both storage and retail purposes. Instead of paying a fixed rent, the business operates on a revenue-sharing model with the property owner, each party getting what they need. This is not only a cross-industry experiment but also reflects the common challenges faced by idle 4S stores: poor locations, large areas, and limited business models. Most of these idle stores struggle to find suitable new owners. Whether this clothing outlet experiment will be successful ultimately depends on market feedback.
I. Why are there more and more idle 4S stores?
The automotive industry has been facing tough times in recent years: on one hand, traditional fuel vehicles and joint-venture brands are engaged in price wars, resulting in thinner profits; on the other hand, electric vehicles are becoming increasingly popular, with many people placing orders online directly before picking up their cars at the store (for example, Shi Chunming ordered his GL8 through a mobile app). As a result, the role of traditional 4S stores has diminished.
Data shows that by the end of 2025, the number of 4S stores nationwide will have decreased by more than 400, representing a 1.4% reduction in total scale. This is just the "net decrease"; in reality, even more stores have closed or changed their brands. The landlords of these vacant stores still have to cover costs for utilities, property management, and depreciation, making them a problematic asset.
II. Why would a clothing business owner consider using an 4S store?
Shi Chunming, who has been in the clothing supply chain for years, has been troubled by two issues: firstly, warehouses can only store goods but not sell them, leading to inventory depreciation over time; secondly, the rent for traditional physical stores is too high (formerly accounting for 20% of sales revenue, making it unprofitable). The idle 4S store solves both of these problems:
1. Large enough space with minimal renovation required: 4S stores have exhibition areas of over 3,000 square meters and ample parking spaces. With some cleaning and the addition of shelves, they can be converted into clothing outlets, saving on renovation costs similar to IKEA-style displays.
2. Risk reduction through a revenue-sharing model: There is no need to pay a fixed rent; instead, 10% of sales revenue is shared with the landlord. This reduces financial risks, as there are no substantial upfront investment costs even if sales are low.
3. Dual use: storage and retail: The space can be used for storing goods for other businesses or for direct sales to consumers, accelerating inventory turnover and preventing depreciation.
III. The perfect match between Shi Chunming and the 4S store owner
The cooperation between Shi Chunming and the landlord in Anqing is essentially a mutual rescue:
- Shi Chunming's needs: He needed a low-cost, large-scale physical space that could be used for both storage and sales to manage his inventory.
- The landlord's needs: The store had previously been rented to an independent brand and resulted in a loss of 4 million yuan. It has been idle for over half a year, continuously incurring costs for utilities and depreciation. Even if the revenue sharing is small, it’s better than leaving it vacant.
The landlord stated, "There was no hesitation; leaving it empty means continued losses, so why not give this new approach a try?"
IV. What makes 4S store transformations difficult?
Not all idle 4S stores can be successfully converted, mainly due to the following challenges:
1. Limited locations: Sixty percent of 4S stores are located in automotive business districts (such as industrial parks), where consumers go to buy cars, not necessarily clothing.
2. Excessively large areas: These stores often cover several thousand square meters, which may be unsuitable for non-autonomous businesses (such as film shooting or furniture displays) due to high rent or large size.
3. Mismatch in business models: There are few potential buyers within the automotive industry (especially with limited expansion by electric vehicle brands), and other industries are not interested.
Industry experts say, "There is currently no particularly effective solution."
V. Is this experiment feasible? Opportunities and risks coexist
It’s uncertain whether Shi Chunming’s venture in Anqing will be successful:
- Opportunities: The consumer markets in prefecture-level cities and counties are concentrated, making it easier to promote the business. If clothing prices are competitive and there is a wide range of options, consumers may be willing to drive several kilometers to make purchases.
- Risks: The customer flow in automotive parks is focused on car sales; whether this can be converted into clothing sales remains to be seen. The large space and associated costs mean that a significant volume of sales must be generated to cover expenses.
However, for the landlord, waiting means continued losses. With the first batch of clothes set to be displayed by the end of July, whether the store can transform from a car showroom into a clothing outlet depends on future customer traffic and sales performance.
In conclusion
This is a cross-industry experiment where both parties meet their needs: the clothing business owner solves inventory and space issues, while the 4S store owner reduces losses from having an idle property. Whether this approach can become a general solution for 4S stores remains to be seen by the market. After all, not every idle 4S store will find a willing buyer, and not every clothing business owner is interested in converting an automotive business district into a clothing outlet.