David Andrews has added another option to his shopping rotation: pawnshops.
The Osseo, Minn., man recently discovered that some are supplementing their usual assortment of guitars, TVs and jewelry with new merchandise purchased from liquidators.
Pawnshops are spiffing up their stores, adding new merchandise and trying other strategies to attract customers like Andrews who wouldn’t have considered the outlets in the past.
Since 2007, the number of pawnshops nationwide has grown from about 7,000 to 10,000, according to U.S. Census Bureau data. Pawn-industry revenues were $15.7 billion nationwide in 2012, as reported by Marketdata Enterprises in Tampa, Fla.
Some pawnshops are considering getting out of the retail business and focusing on providing a bank alternative to the unbanked and under-banked. Other pawnshops have poured big bucks into retail buildouts and remodels and added new merchandise to augment a declining amount of pawned merchandise.
Pawnshop owners have been forced to find new sources for merchandise to stock stores after more consumers discovered Craigslist and eBay in the recession, said Howard Grodnick, president of Jacobs Trading Co. in Hopkins, Minn. Those sources include wholesalers and liquidators such as Jacobs Trading, which purchase retailers’ and manufacturers’ returns, overstocks and damaged goods.
“In the past two years, the amount of merchandise we sell to pawnshops has more than quadrupled,” Grodnick said.
Patrick Doolittle, owner of four Excel Pawn and Jewelry locations in Minnesota, has had great success selling liquidated odd lots of patio sets, bicycles, above-ground pools and lawn mowers — many of them brand-new. They’re purchased from wholesalers that buy leftovers from Costco, Sam’s Club, Sears, Target and Walmart.
“New merchandise makes up over 50 percent of my sales now,” he said.
Business is so good that he’s adding a warehouse to store the merchandise and to distribute it to his stores. “In the future, people may take out fewer loans (pawns), but there will always be retail,” he said.