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 11,100 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 6-7 workers and generates $8 million in annual revenue.

    • There are about 11,100 pawn shops in the US employing 72,600 workers and generating $42 billion in annual revenue.
    • According to the FDIC, 5.6% of unbanked US households and 1.1% of banked households used pawn shop loans in 2019.
    • 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
                              Source: Vertical IQ and Inforum

                              Recent Developments

                              Nov 12, 2022 - Unbanked Rate Decreases
                              • About 4.5% of households nationwide were unbanked in 2021, according to a survey by the Federal Deposit Insurance Corporation (FDIC). That’s the lowest rate the agency has recorded since it started the survey in 2009. At least 30 million unbanked or underbanked American households use pawnshops each year, according to the National Pawnbrokers Association. The coronavirus pandemic may have played a role in lowering the rate. One in three households that added a bank account since March 2020 said that they did so because of an incoming government benefit payment. Those could include unemployment benefits or a pandemic stimulus payment. The pandemic may also have contributed to account closures, however. The FDIC survey found that one in five recently unbanked households closed an account since March 2020 because someone lost or quit a job, was furloughed, had hours reduced or had a significant loss of income.
                              • Climbing interest rates and prices are putting pressure on people’s finances but most people aren’t getting big loans from their local pawn shop. The average is about $150, according to the National Pawnbrokers Association (NPA). Industry experts have noted a pattern of people buying items when government subsidies were helping out, and then coming in to use those items as security for loans as the economy tightened and everything got more expensive. About 30 million people who don’t have a bank, or access to bank services, use pawn shops every year, according to the NPA.
                              • Inflation, as measured by the US Bureau of Labor Statics' Consumer Price Index (CPI), increased 0.4% month over month in October, the smallest increase since July, and 7.7% year over year. The CPI measures what consumers pay for goods and services. The year-over-year inflation increase was the smallest since January. June’s 9.1% year-over-year inflation rate was the highest in four decades. “A strong labor market and strong job growth supports strong demand, which allows inflationary pressures to stay elevated,” said Blerina Uruci, US economist at T. Rowe Price. “You’ve got more demand chasing goods and services, the supply of which is being impaired at the moment.”
                              • Expanded Supplemental Nutrition Assistance Program benefits are also set to fully expire once the Biden administration declares the COVID-19 public health emergency over. Experts say that millions of families would be forced to choose between keeping food on the table and meeting other essential expenses if these programs aren't renewed or if new programs aren't established to replace them. Continuing food aid could help families that have struggled financially due to the pandemic and reduce the number of items brought to pawn shops.
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