Even pawnshops got it rough

November 28th, 2009 by Philip Brasor & Masako Tsubuku

Only a pawn in their game?

Only a pawn in their game?

You have until Sunday, Nov. 29, 4 p.m. to partake of the bargains at the semi-annual Shicchy Charity Fair, which takes place at the Tokyo Ryutsu Center in Heiwajima, Tokyo. The fair offers at rock bottom prices some 100,000 luxury items that have been donated by members of the Jounan Pawnshop Cooperative. The proceeds go to charity, though exactly which charities isn’t specified.

How cheap is the merchandise? Well, genuine Louis Vuitton bags start at ¥20,000, which is, I gather, really low. There are a lot of designer bags on sale, as well as fur coats, jewelry, watches, kimonos and accessories.

Apparently, there is less merchandise than at previous Shiccy Fairs owing to the fact that, like everything else in this recession, the pawnshop business isn’t doing so well. That may strike some people as being strange. Pawnshops would seem to thrive during bad times, since people who’ve been laid off or otherwise financially compromised tend to be desperate and thus would be more likely to pawn their possessions for some quick cash. However, the nature of the pawnshop business in Japan has changed over the past few decades.

Shichiya have been a fixture of Japanese life since the Kamakura Period (1885-1333), and until the 1960s, when consumer finance companies started, they were the only commercial establishments where common folk could borrow money. Though hardly disreputable, shichiya tend to be located on back alleys so that patrons can enter or exit without being noticed by everyone in the neighborhood. Consequently, they figure a lot in comic tales by rakugo storytellers (usually in routines about not having enough money for the New Years holidays) and have given rise to their own subset of slang. For instance, the word “shichi” for “pawn” is pronounced the same as the word for the number 7, and shichiya are often indicated by the Chinese character for “7″ in a circle. This gave rise to the joke that one was off to make a withdrawal from the “ichi-roku ginko,” or the “one-six bank,” since one plus six equals seven.

Laws regulating shichiya were not enacted until 1950, and have remained pretty much unchanged since then, but interest was pretty steep, sometimes more than 100% when calculated on an annual basis. However, no one pawned their valuables for that long. Usually, people would redeem their things in a week or two. Most shichiya hold pawned items for no more than three months, after which they take possession and sell them. All licensed shichiya must have a kura (warehouse) attached and post interests rates and time limits on the premises. They also need to know how to spot stolen and counterfeit goods.

The peak for shichiya was 1958, when there were 22,000 pawnshops throughout Japan. Now there are only about 2,500. This attrition is partly due to the fact that the vast majority of shichiya are family businesses and heirs have decided not to take them over, but it mainly has to do with the rise of non-collateral forms of lending that made it easier for lower income people to get ahold of quick cash.

Consequently, most shichiya now do very little lending. They mainly buy used goods and sell them, which explains why they are suffering just like other retail businesses. According to a recent article in the Sankei Shimbun, most of the merchandise sold by shichiya are obtained either from wholesalers clearing their inventories or from women who buy a lot of luxury goods. A representative of Le Depot, a shichiya chain that calls itself a “recycle shop,” told the newspaper that club hostesses, rich “office ladies” and housewives, when they buy a new designer bag or coat, often bring their old ones in to sell. In Japan, the turnover among such women is legendary, which is why there are so many high-end designer boutiques in Japan’s major cities.

With the recession, however, they aren’t buying new things and so aren’t selling their old ones. Le Depot’s stock, especially in the heretofore lucrative area of designer bags, is down 20 percent since last year, and their sales are down 30 percent. What they do see a lot more of is expensive items that might be considered heirlooms, meaning they were bought or received many years ago and the owner had no intention of ever giving them up.

They seem to have a surplus of fur coats obtained originally during the late ’80s bubble period. At that time, a fur coat would normally sell for about ¥2 million, and they buy them now for about ¥200,000. Actually, a 10 percent return on an item that’s more than 20 years old isn’t bad. It’s certainly a lot better than a car.

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