It has been a huge year for retail sales so far in the holiday shopping season, with $52 billion spent over Black Friday weekend and another $6 billion spent online during the “Cyber Week” that followed. Here’s one more hot consumer trend, which is unsurprising given the still-shaky state of the economy: More and more shoppers seem to be buying holiday gifts at the pawn store.
There are some 13,000 pawn shops around the country, and many are reporting strong sales for 2011—and especially strong sales as the year comes to a close. Noting that the world of pawn is a $6.1 billion (and growing) industry in the U.S., the Minneapolis Star-Tribune takes a close look at Pawn America, a chain that runs 22 stores in four states. The holiday period always tends to be good for business at pawn stores, and the holiday season of 2010 was Pawn America’s best ever. Until this year, that is. Pawn America’s sales numbers on Black Friday of 2011 were 35% higher than last year.
Some anecdotal evidence elsewhere in the country: A CBS TV station in Detroit highlights a local pawn shop, Garden City Exchange, which says its business is up 49% thus far in 2011. A radio station in Portland, Ore., meanwhile, interviews a local pawn shop manager who says business is great “especially during the holiday season.” The Daily Record (in N.J.) reports that three publicly traded pawn operators (Cash America International Inc., Ezcorp Inc. and First Cash Financial Services Inc.) have recently reported net incomes that are 25% higher than a year ago.
What’s bringing in all the holiday shoppers to pawn stores?
The trend is partly seasonal. December is always a big month for sales in pawn shops and new retail locations alike. In recent times, though, consumers seem to have grown increasingly more comfortable with the idea of hitting the pawn shop, even when it comes to Christmas shopping.
During the heart of the recession, reality TV shows like “Pawn Stars” really took off and gained popular followings among viewers. Pawn shops, formerly presumed to be seedy spots sought out only by the truly desperate, are now more palatable to the mainstream, thanks to “Pawn Stars” and its followers like “Hardcore Pawn.”
The stigma associated with buying and selling at a pawn shop has also mostly disappeared thanks to the frugal “new normal” era ushered in by the recession. There’s no shame in heading to the pawn shop. Today, it’s become viewed as smart, rather than just cheap, to buy used, resell goods collecting dust, and make do as needed. Everybody, it seems, uses eBay, Craigslist, or perhaps the new online pawn operation PawnGo in order to swap, sell, or buy stuff.
During the holiday season, consumers have extra reason to seek out the two main services provided by pawn operations. First, shoppers looking to stretch their budgets can pick up jewelry, electronics, or toys for folks on their Christmas lists and typically pay a fraction of the prices for new merchandise at the mall. Second, shoppers who are short of cash needed to buy gifts can bring in goods they own—perhaps last year’s Christmas presents that aren’t being used?—and either pawn or sell them outright at the pawn shop.
Remove all the financial considerations from the equation and there’s still a reason to consider shopping secondhand: Given today’s mass-produced shopping experience, in which Amazon, Target, Best Buy, and Walmart are often essentially selling the same exact merchandise, pawn shops, flea markets, and yard sales stand out because of the randomness and uniqueness of their selections.
Good luck trying to buy a one-of-a-kind gift at Walmart. But at a pawn shop or a flea market? That’s where there’s stuff you couldn’t find anywhere else in the world.