If you want to make money – open a coffee shop

Redwood Comment
Published:  28 September, 2016
Mike Redwood

In pretty much every city in Europe and China that I have been recently, the retail traffic appeared significantly down compared with a year ago. Part of this is the big shift to online purchasing as more and more consumers find smartphones and tablets a very convenient way to buy.

But it looks like we are seeing a structural change at the same time. Part of it relates to the big trends of urbanisation and ageing societies. Older people now go on cruises and younger people find city living expensive so neither spend so much on things. Both groups prefer experiences so if you want to get rich, open a coffee shop, just make sure it is a good one and is well located.

The one unexpected place that is a little different is Japan. For twenty years Japan has had an economy drifting in and out of deflation and making the world despair, but on the ground today the shops are busy. There is an odd equation here as how much do we expect an economy to grow if the population is actually falling as it is in Japan, where not only is the population ageing but the young people refuse to marry or even have sex? So measured per capita, things are not that bad: and unmarried singletons have disposable income.

Yet in the historic tanning town of Himeji, hotels were hard to come by not because of the pace of business, but because of the huge number of tourists there to visit the wonderful white castle with its nightingale gallery. The growth in luxury good sales in Japan has been largely driven by tourists, especially the big numbers from China who are out in force in the upmarket Ginza district of Tokyo every night, whatever the weather.

The Japanese have not ceased buying luxury items, but according to Leo Lewis in the Financial Times, Japanese tastes in luxury have been shifting towards value for money and low ostentation. Take a train ride from Tokyo to Koshu in Yamanashi Prefecture and visit the Inden store and museum. There, or in one of their other three stores in Japan, you can buy one of their exclusive deerskin handbags or small leather goods. Each one is exquisitely treated with Japanese lacquer to create a traditional pattern from the leathers they made for the Samurai over the last five centuries. There are only forty workmen making these products, and the knowledge of the tannage and the treatment is well guarded. Each item is carefully stamped with their tiny logo and with that logo you are guaranteed repair for life.

Expensive, but far from outrageous, these beautifully crafted items which marry technology and art are perhaps the way the leather industry needs to go. The Japanese have always owned far less, consumed far less and recycled much more than Europeans or Americans. Buying a quality leather item and keeping it longer makes good sense. And in Ginza they have plenty of money left for a cheap coffee in Le Cafe Doutor, sitting in an upstairs window watching the Chinese tourists spend.

Mike Redwood

28th September 2016

mike@internationalleathermaker.com

Follow Mike Redwood on twitter: @michaelredwood

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