Pawnshops Boom Among Young Investors Despite 40 Percent Drop in Store Numbers

Young people visiting pawnshops for investment?

As prices of precious metals such as gold and silver continue to rise, neighborhood pawnshops are thriving. According to the credit research company Tokyo Shoko Research, among 42 pawnshop companies whose sales and final profits could be compared over five consecutive terms, total sales have increased for three straight years. In fiscal 2024, sales rose 5.4% year-on-year to 17.911 billion yen, while final profits jumped 30.4% to 1.055 billion yen.

So what is happening on the ground? We visited the Azabu-Juban Purchase Center of Daikokuya, which operates over 280 pawn and purchase stores nationwide (Daikokuya’s sales for the fiscal year ending March 2025 reached 47.9 billion yen and are not included in the TSR survey).

Shin Kobayashi, a manager with over 20 years in the industry, described the current situation:

“More customers are using our services, and with rising market prices, the average transaction value has also increased. Pawn loans and outright purchases are about half and half.”

In the past, items such as kimono or golf club memberships were handled, but today the focus has shifted to precious metals, luxury goods, jewelry, and watches. Customers are evenly split between men and women across all age groups, but recently there has been a noticeable increase in younger clients.

“People interested in rising gold prices come in to ask how much their items are worth or whether they’re genuine, and many end up pawning or selling them,” Kobayashi explained.

Could the shop’s location near affluent areas like Roppongi Hills also play a role? Kobayashi added:

“Some customers convert their belongings into cash and use the funds for investments. Many choose items like gold or Rolex watches that don’t easily lose value. There are quite a few younger customers as well.”

Why pawnshops are chosen over flea market apps

In the Showa era, pawnshops had a negative image as places used discreetly by people short on cash. However, that perception has changed significantly.

Yoshihiro Sakata from TSR’s information department explained:

“In the past, pawnshops were associated with financial hardship, but today they’re closer to buy-and-sell businesses or recycling shops, where people dispose of unwanted items.”

Even though online marketplaces now allow easy peer-to-peer transactions, pawnshops are still chosen for their professional appraisal and sense of security. Selling expensive items online comes with concerns: whether payment will be completed, whether complaints will arise later, or whether items are truly authentic.

Sakata emphasized the role of pawnshops:

“For high-value items, experts can properly assess and evaluate them.”

Customers can leave their items for appraisal and borrow money against them. The standard loan period is three months, and if the principal and interest are repaid within that time, the item is returned—another factor that provides peace of mind.

Fewer stores despite strong profits?

Although the pawnshop industry is performing well and demand is rising, there is surprising data. According to Tokyo Shoko Research, based on licensing data from the National Police Agency, the number of pawnshops (licensed pawn businesses) dropped from 4,119 in 2003 to 2,428 in 2024—a decline of about 40%.

TSR attributes this to the growth of other purchasing businesses and recycling shops, as well as aging business owners and a lack of successors.

Another factor is the high barrier to entry. Operating a pawnshop requires approval from the prefectural public safety commission. In addition to experience and capital, operators must install a highly secure “pawn vault” (shichigura). Since these vaults store valuable pledged items, they must be built with specialized security and fireproofing from the design stage. Even for chain operations, each store must have its own vault, and transferring pledged items between locations is prohibited.

Kobayashi from Daikokuya offered his view on why independent neighborhood pawnshops are declining:

“Many are run privately on residential property, and with aging owners and increasing security risks, more people may be deciding to close their businesses.”

The trained eye to spot counterfeits

To survive in such a challenging environment, pawnshops must continually refine their most critical skill: expert appraisal. They need the ability to identify newly released products, increasingly sophisticated counterfeits, and even lab-grown diamonds. If an item is fake, its value drops to zero.

“It’s essential to examine items carefully in person. Pawnshops must also properly manage entrusted goods, so knowledge and experience are indispensable,” Kobayashi said.

Amid rising living costs, there are now many ways to sell unwanted high-value items. However, the reliability of pawnshops—backed by professional appraisal—remains strong. The trained eye of neighborhood pawnshops is once again being reevaluated.