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 15, 2023 - Moderate Sales Growth Expected
- Pawn shops sales are forecast to increase at a 3.5% compounded annual rate from 2022 to 2027, slower than the growth of the overall economy. Industry employment has recovered from a modest pandemic-related drop in 2022 and exceeded pre-pandemic levels in late 2023.
- The Supplemental Nutrition Assistance Program (SNAP) raised its income limits in October, meaning people who previously weren’t eligible to receive grocery assistance may now qualify. The number of items brought to pawn shops may decrease as people find it easier to keep food on the table and meet other essential expenses. The monthly allotment of benefits is also going up in an attempt to keep up with inflation. Supplemental Nutrition Assistance Program (SNAP) Benefits decreased for millions of recipients on March 1 due to cuts in the 2023 Omnibus spending bill. Some households saw a loss of $250 or more in benefits based on their incomes.
- Personal income, an indicator of demand for pawn shop loans, increased 0.3% month over month in September, while personal spending increased 0.7%, according to the US Commerce Department's Bureau of Economic Analysis (BEA). Real disposable personal income — what Americans make after adjusting for inflation and taxes — fell 0.1% and was down for the fourth consecutive month. Some experts say that consumers have been tapping into savings to fund spending that exceeds personal income growth, and that creates a big risk for the economy in 2024 if consumers are forced to cut back. Americans have "been running down our savings and borrowing more to fund this spending growth through the recent period, and that is not sustainable," said James Knightley, ING's chief international economist.
- 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.
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