Joe Apkarian takes in shoes at Expert Shoes & Luggage Repair in Washington DC.
Joe Apkarian takes in shoes at Expert Shoes & Luggage Repair in Washington DC.

A stitch in time saves more than just soles



WASHINGTON, DC // Every so often, a young woman with a US$30 (Dh110) pair of broken high heels walks into Joe Apkarian's shop and asks if he can fix the heel. Of course he can. Mr Apkarian and others in the industry say such customers - many of whom have never had a pair of shoes fixed - are coming to cobblers more often these days, as tighter budgets hit consumers.

"Will I see them again? I don't know," Mr Apkarian said. But long-time customers have to be first-time customers first, and for a new wave of first-time customers, cobblers have the recession to thank. "Whenever people don't have money coming in, they try to repair things - that's obvious," the Syrian-born Armenian cobbler said at his shoe and luggage repair shop on a small street in a well-off neighbourhood of the US capital.

While many shoe repair shops throughout the US reported higher profits last fall and winter - the best seasons for cobblers - it does not stop at shoes. Fewer Americans are buying new cars, and that has been a boon for some auto mechanics. Less eager to run out and buy a new stereo, television or computer, more Americans are turning to electronics technicians. Basically, Americans are fixing things more. This year will see the lowest number of auto sales in decades, according to Standard & Poor's - sales were down more than 35 per cent last month alone. As a result, cars on the road are getting older.

A recent RL Polk report has found US passenger vehicles now have a median age of 9.4 years, compared to 9.2 last year and 8.3 in 2001. "People are keeping their cars longer, and to keep a car longer, of course you have to do the necessary repairs to keep it safe," said Angie Wilson of the Automotive Service Association, a group that represents independent car mechanics. "Overall, our members are saying that they are seeing an increase."

In an informal ASA survey last fall, more than 60 per cent of the group's members reported that business was better in 2008 than the year before, and two-thirds expected 2009 to be even better. Not all mechanics are seeing the rise, and some report having to help customers who cannot afford all the necessary work to prioritise repairs. But for many, business is good. The same is true for the Geek Squad, which provides computer, television, appliance and gadget installation and repair. The company says it has 20,000 technicians in the US alone, easily making it the largest provider of these services.

"The per cent of our business going to repair has been increasing since the end of last year, and we also find people are coming to us for advice: 'Should I repair or replace?'" said Paula Baldwin, a spokeswoman for the company. The Geek Squad recently added a Fix or Replace Calculator to its website. Only time will tell if American consumers are changing their ways for good, but for now cobblers and others welcome the new momentum - even those who have seen no increase in business but recognise that a lack of decline is already an achievement in this tough economy.

Mr Apkarian reported only slightly higher profits, partly because his business was already strong. "In this area, they all wear good shoes to start with," he said of the neighbourhoods around his shop. People who buy $500 shoes know to take care of them. Lately, however, more people are bringing in their $40, $50 and $60 shoes for repair - shoes that a couple of years ago they might have tossed and replaced, he said. And this is giving a struggling industry a much-needed lifeline.

Randy Lipson, of the Shoe Service Institute of America, says many Americans do not know what cobblers can do. "Even if they're not the most expensive shoes, if somebody likes them and they're comfortable, we can help them - although people don't know that." Shoe repairers agree that it does not make financial sense to pay for repairs on a $10 pair of shoes, but touching up the leather, fixing a buckle, re-attaching a strap, capping a heel and weather proofing can all extend the life of well-loved pair of $30 shoes, and Mr Lipson's trying to get the word out by telling young customers to tell their friends about shoe repair.

He is also working to establish some type of formal programme in the United States to train cobblers, most of whom are immigrants who received the bulk of their education in their home countries. US cobblers are, by and large, an older bunch. Some fear the trade will die out with their generation. In addition to sitting on SSIA boards, Mr Lipson is a third-generation cobbler who is seeing about 10 per cent more business at his St Louis, Missouri-area shop compared to last year.

Like Mr Apkarian, Mr Lipson deals in a lot of high-end shoe repair, but he believes many younger people would be interested to learn that a shoe repair shop may be able to make well-worn trendy Uggs look new. The Christian Louboutin crowd may or may not already know that a good cobbler can preserve the redness of the trademark red soles, he noted. Mr Lipson thinks cobblers should work with new styles - and be grateful for gifts like pointy toes, because such designs frequently need reinforcement and repair.

Mr Lipson does not have hard data but has heard from a good number of cobblers that business is up at many of the estimated 7,000 shoe repair shops in the US. Optimistically, he thinks shoe repair outlets can hold onto the new customers they get in a recession, and, by staying current, win over the younger generation. That seems to be working for Jorge Peña, who has recently done so well on U Street - a popular and young part of town - that he's opened a second shop in the nearby neighbourhood of Columbia Heights, which is similarly young and fashionable. Mr Apkarian, the Washington cobbler, recalls about 20 years ago, when "the shoe repair industry was going from bad to worse - lots of cheap shoes were showing up, people didn't care - they only cared about style."

He became a certified orthopaedist at that time, figuring people with special footwear needs would always be around. "The young people don't realise that, yeah, they're saving money today, but they're going to come back and pay it to me later on in life because their feet are messed up and they're going to need special things put in their shoes," he said. * The National

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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”