Doolittle attributes the shift in his merchandise mix to a much softer gold market and to more pawnshops competing for less merchandise.
In Minnesota, the king of pawnshop hill is Brad Rixmann, who owns 29 Pawn America stores.
Rixmann has instituted a number of changes that put him and his stores ahead of the curve nationally, said Emmett Murphy, spokesman for the National Pawnbrokers Association. “Brad is an innovator,” Murphy said. “He’s diversifying the business model.”
The stores, which are expected to generate $84 million in sales this year, according to Rixmann, resemble a middle-market discounter.
“I don’t want to look just at other pawnshops for competition,” said Rixmann. “I want to compare ourselves to convenience stores and big boxes and ask how we can plug ourselves into that company.”
One example of that shift is the deliberate avoidance of the word “pawn” in the company’s two newest stores, called PA Exchange. The two stores do not have a pawn counter in them, although pawns are done at an adjoining store with a separate entrance.
These kinds of hybrid stores, minus the pawn loans, allow Rixmann and other owners to open stores where a traditional pawnshop may not be allowed because of zoning regulations.
Still, only 7.4 percent of U.S. households have used a pawn store, according to the Federal Deposit Insurance Corporation’s 2012 survey.
Some pawnshop owners are considering avoiding the retail stigma by concentrating on the more profitable piece of the business: the pawn (loan) in which customers are charged interest and fees of 7 percent to 22 percent per month on a collateral loan.
Nearly 80 percent of pawnbrokers reported that loans are the most common transaction, not retail sales or cash for gold, according to the National Pawnbrokers Association.
Whether the consumer is looking for retail or a loan, the pawn industry continues to find ways to attract customers who wouldn’t normally go into a pawnshop.
Reality shows such as “Pawn Stars” and “Storage Wars” have removed some of the stigma and encouraged people to include pawnshops when looking for collectibles and oddities. Luxury pawnshops in Las Vegas and Beverly Hills, Calif., now specialize in niches such as luxury handbags, art and wine collections, said Murphy.
Contact John Ewoldt at email@example.com. Distributed by Scripps Howard News Service, www.shns.com.
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