The New Image of the Pawn Industry [Guest Post]
I am very proud of the pawn industry.
Unfortunately, an inaccurate image about pawnshops is widespread among the public.
Having confronted this fact for over twenty-five years, I have found if you don’t deal with it in a timely and straightforward manner, the negative perceptions linger. So, to combat this, I have devised an easy to follow questionnaire that can dispel unfounded myths about pawnshops while having a bit of fun at the same time. I call the questionnaire The Pawn Shop IQ Test.
When I meet someone for the first time that does not know about pawnshops and has not been in a pawnshop, I let them know I have an amusing little quiz to measure their understanding about pawnshops. Following is dialogue that typically takes place when I administer The Pawnshop IQ Test:
To start out I tell them, “We make our money lending money.”
“What do you think is the average size of a loan in our industry?”
Most people guess it is $3000 to $4000. When I give them the answer (the average size of a pawn loan in the United States is about $130), their jaws drop in amazement.
“What percentage of the loans in a typical pawnshop are picked up and paid out by those who take the loan?”
The answer I usually get is that about 10% of the loans are paid with the customer picking up the merchandise. Often my listener is incredulous when I explain that over 80% of pawn customers return to the shops, pay off the loans and pick up their merchandise.
“How big do you think the pawn industry is in the United States?”
Most answer it is in the $100 Million range. Factually, when the financial activities of corporate and independent pawnshops in the United States are compiled to one total, it comes in at around $7 Billion. Hardly anyone has ever come close to guessing the financial size and beneficial impact of the pawn industry.
“How much of the merchandise in a pawnshop is stolen?”
I came up with this question to confront the myths about our industry. Answers I hear are nothing short of amazing and range from none to most of it. Typically the answers place the amount of stolen merchandise to be found in a pawnshop at 25% to 50%.
“Do you really think law enforcement would allow pawnshops to stay in business if they were accepting stolen merchandise?”
The answer is actually less than 1/10 of 1% of the merchandise found in a typical pawnshop is stolen. To take out a pawn loan in Canada, Mexico, and the United States, a customer must provide the pawnbroker with a government approved form of identification, a thumbprint and a signed pawn document that certifies the merchandise presented by the customer is, in fact, owned free and clear by the customer. For the protection of the pawn customer detailed information about the item placed in pawn (including serial numbers) is recorded on a pawn ticket and that information is provided electronically each day to local law enforcement. Criminals know this, and they stay away from pawnshops in droves.
As you can see, the myths about pawnshops have no bases in fact and are completely inaccurate. The next time you meet someone who does not understand the pawn business, give him or her the quick little quiz described above. How well they answer the four easy questions might just open their eyes to the truth about pawnshops.
John Thedford is one of the most successful CEO’s in the pawn business. He founded Value Pawn & Jewelry and grew it to a chain of 70 pawn shops across the Southeastern US. He sold that business to the publicly traded pawn giant EZCorp. Since then, John has founded Premier Financial Group, La Familia Pawn which has 20 stores in Florida and Puerto Rico. He has become an author and thought leader in the fast growing pawn industry.
John’s book, Smart Moves Management: Cultivating World Class People and Profits outlines the Strategic Path that John and his management team developed to engage customers, employees, and investors in the pursuit of world class business performance.
John is an energetic spokesperson and advocate for the pawn business. All of us, customers, employees, and investors, benefit from his efforts to change the perception of pawn shops to that of true financial centers for the communities we serve.
Post by Don BattisDon Battis
is the CEO of Pawntique.