Pawn Shops
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 10,600 pawn shops in the US provide secured loans to individuals, using items of personal property as collateral. Firms earn interest and service fees on the loan, with interest rates charged varying by state. Pawn shops also generate revenue by selling used merchandise obtained from unpaid loans. They may also sell new and used items purchased from consumers or businesses.
Federal, State And Local Regulation
Pawn shops must comply with a number of federal regulations, as well as state and local regulations that vary widely from state to state.
Dependence On Gold Prices
A substantial portion of most pawn shops’ loans are secured by gold jewelry.
Industry size & Structure
The average pawn shop operates a single location, employs 5-6 workers and generates $8.6 million in annual revenue.
- There are about 10,600 pawn shop establishments in the US employing 57,300 workers and generating $42 billion in annual revenue.
- Use of pawn shop, payday, tax refund anticipation, and auto title loans, and of rent-to-own services all decreased between 2017 and 2021, according to the FDIC. About 1% of households used each product or service in 2021. The proportion of households that used at least one of the five products or services decreased sharply from 7.4% in 2017, to 4.8% in 2019, and to 4.4% in 2021.
- The industry is concentrated, with the 50 largest firms representing 78% of industry revenue.
- The two publicly-traded pawn chains are EZCorp and FirstCash (formerly First Cash Financial and Cash America), and they account for about 22% of retail locations.
Industry Forecast
Pawn Shops Industry Growth
Recent Developments
Nov 14, 2024 - Gold Price Remains Near All-time High
- The spot price of gold increased from about $1,800 per ounce in October 2023 to over $2,600 in early November 2024, a 44% increase. The spot price of gold hit an all-time high of $2,788.54 on October 30, 2024. A substantial portion of most pawn shops’ loans are secured by gold jewelry. Many shops also buy gold jewelry when gold prices are high and resell it for scrap value. Significant decreases in the price of gold can result in decreases in merchandising sales margins, inventory valuations, the value of collateral securing outstanding pawn loans, and the balance on pawn loans secured by gold jewelry.
- The challenging macro-economic climate is fueling robust customer interest in short-term cash solutions, according to pawn shop operator EZCorp. The company responded by adding one new and five acquired US stores during its fiscal Q3 2024. EZCorp's fiscal 2024 Q3 revenues increased 10% year-over-year to a third-quarter record $281.4 million. This was primarily driven by a 14.1% increase in pawn loans outstanding compared to Q3 of fiscal 2023, which drove a 14.9% increase in pawn service charges to $107.8 million.
- Pawn shops are seeing more people looking for cash to pay bills and living expenses, according to Texas pawn shop manager Dakota Wright. Wright has noticed an increase in the number and dollar amount of loans being processed by the store, going from mostly loans at $100 or less 10 years ago to loans of $500 or more doubling in the last several years. Many of the loans are to new customers who are loaning or selling items.
- Personal income, an indicator of demand for pawn shop loans, increased 4.48% year over year and 0.21% month over month in June, according to the Bureau of Economic Analysis. International, secondary market, and all other nondepository credit intermediation industry employment decreased slightly during the first nine months of 2024, according to the US Bureau of Labor Statistics. Pawn shops sales are forecast to increase at a 3.59% compounded annual rate from 2024 to 2028, slower than the growth of the overall economy, according to Inforum and the Interindustry Economic Research Fund, Inc.
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