I’ve been doing pawn shops long before it was cool. I’ve always been on the buyer side except for one time in my reckless youth, which I swore I would never do again after seeing my article with a “sold” ticket on it for $300, when I had received $30 for it when I pawned it. In the many years I’ve been visiting pawn shops, I’ve seen some changes and some things that never change. I’ve been in small mom-and-pops, large mom-and-pops, and chain/franchise shops and they all need help in some way.
No matter where you go, a clean pawn shop is a rarity. They may start out clean, but they fall into disrepair faster than any other retail location. A Cash Converters in PA used to be a pleasant “shopping” experience, but returning to it a few years later, it had become scary and depressing. It just doesn’t seem possible to hire a staff that can overcome the futility of the pawn industry. There is no incentive to make things nice, because it doesn’t seem to matter. My biggest pet peeve and the issue I least understand is why doesn’t the staff at least clean the items before putting them on display? Seriously, it’s maybe 15 minutes of time. Surely there’s 15 minutes in a day where there are no customers needing assistance.
The next issue is that you frequently have a dozen of the same things, which is usually the same thing you can buy new anywhere else for only a little bit more money (which is point #3). You can have six or seven Nintendo Wiis and XBoxes and PS3s. All kinds of generic DVD players. Bunches of power drills and other tools. In the smaller mom-and-pops, it’s like sifting through a garage sale. Larger mom-and-pops are like indoor landfills. One shop I visit has bins of wrenches and sockets. Bins. As if someone who needs a 1/4” socket will root through the 60 or so 1/4” sockets in the bin until they find the exact one they want.
The last issue is value. I know first-hand how little a pawn shop will pay for an item and I have seen some internal reports on the profit margins of pawn shops. The reason pawn shops become incubators of worthless junk is because the owners or managers don’t understand turnover. The chain that does understand this is Cash America. They discount items based on how long they’ve been in inventory. Other chains and mom-and-pops don’t do this. So when I see a generic MP3 player that is priced higher than a current model would cost on Amazon, I know that item will never be sold and it will end up in the display case forever. For as big a deal is made over pawners over-valuing the item they’re pawning, pawn shop managers are just as much at fault for hanging on to unrealistic pricing.
See, if I ran a pawn shop (and it is a possible fallback venture if I ever became unemployable), this is how I’d do it. Obviously, the standard pawnbroker guidelines are followed, but…
- The store is clean. And by clean, I mean floors, windows, counters, carpet, and seating.
- The pawning area is separate from the sales area. This gives pawners some dignity and makes things less uncomfortable for buyers. I first saw this idea at Cash Converters and it stuck with me.
- Items are cleaned before being put on the shelf (see #1). Items are organized well, like CDs and DVDs. You have no idea how many times I’ve wanted to just offer to alphabetize a pawn shop’s DVD shelves for free.
- Believe it or not, a sparse sales area is more disconcerting than a jammed-to-the-walls area. There is a balance that has to be found. At the same time, there is no reason to have seven of the same model of anything on display when three will suffice. This is especially true with CDs and DVDs. No one wants to see The Matrix 20 times when browsing.
- Items are discounted by age and social media would be used to communicate the discounts.
- Online inventory searches would be a must.
- My secret marketing trick: if there are multiple of an item, price one or two at the price you want to get, then mark all the others up at a higher price. When the cheap one sells, mark down one of the others. The buyer feels they got a better deal relative to the other ones offered.
- Secret marketing trick #2: Bundling. Like in the example of the tool bins, bundle them. Find all the sockets to make a full set, match them up with some other tools and sell a whole tool set cheaply. Sell ladders with electric pruners, sell air compressors with bikes, sell matching component stereo pieces. Come on, all these pieces are your inventory, they don’t have to be treated as individual items. This reminds me of an estate auction I was at where if the auctioneer didn’t get his minimum bid, he’d throw something else in with it. If you wanted that new thing, you’d have to take the other stuff, too. Turnover. Do it or get buried.