Pawn Shops in the USNovember 2014 1
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Lend a hand: Retail sales will benefit pawn shops,
but the improving economy will slow growth
IBISWorld Industry Report OD4741
Pawn Shops in the US
November 2014
Britanny Carter
2 About this Industry
14 International Trade
2
Industry Definition
15 Business Locations
2
Main Activities
2
Similar Industries
17 Competitive Landscape
29 Industry Data
2
Additional Resources
17 Market Share Concentration
29 Annual Change
17 Key Success Factors
29 Key Ratios
3 Industry at a Glance
28 Industry Assistance
29 Key Statistics
17 Cost Structure Benchmarks
19 Basis of Competition
4 Industry Performance
19 Barriers to Entry
4
Executive Summary
20 Industry Globalization
4
Key External Drivers
6
Current Performance
21 Major Companies
8
Industry Outlook
21 Cash America International Inc.
10 Industry Life Cycle
22 EZCorp Inc.
12 Products & Markets
24 Operating Conditions
12 Supply Chain
24 Capital Intensity
12 Products & Services
25 Technology & Systems
13 Demand Determinants
25 Revenue Volatility
13 Major Markets
26 Regulation & Policy
30 Jargon & Glossary
www.ibisworld.com | 1-800-330-3772 | info @ibisworld.com
Pawn Shops in the USNovember 2014 2
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About this Industry
Industry Definition
Companies in this industry offer secured
loans to individuals, who then provide
items of personal property as collateral.
Main Activities
The primary activities of this industry are
These firms also retail used goods that
are often acquired from unpaid loans or
are purchased directly from consumers.
Consumer lending (secured loans with personal property used as collateral)
Used goods retailing
Appraising items for purchase or pawn
The major products and services in this industry are
Merchandise sales
Secured loans for personal collateral
Similar Industries
45331 Used Goods Stores in the US
Operators in this industry retail used consumer goods.
52211 Commercial Banking in the US
Operators in this industry use customer deposits to make loans to businesses and consumers.
52213 Credit Unions in the US
Operators in this industry accept members’ share deposits in cooperatives and make consumer loans to their
members.
52229 Real Estate Loans & Collateralized Debt in the US
Operators in this industry are nondepository firms that specialize in lending activity.
Additional Resources
For additional information on this industry
www.nationalpawnbrokers.org
National Pawnbrokers Association
www.pawnshopstoday.com
Pawn Shops Today
www.census.gov
US Census Bureau
IBISWorld
writes over 700 US
industry reports, which are updated
up to four times a year. To see all
reports, go towww.ibisworld.com
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Pawn Shops in the US November 2014 3
Industry at a Glance
Pawn Shops in 2014
Key Statistics
Snapshot
Revenue
Annual Growth 09-14
Annual Growth 14-19
Profit
Wages
Businesses
$6.6bn
3.2%
1.5%
$636.3m $865.8m 5,504
Poverty rate
Revenue vs. employment growth
Cash America
International Inc.
14.4%
% change
EZCorp Inc.
8.2%
6
16
4
15
2
14
%
Market Share
0
−2
Year 06
13
08
10
12
Revenue
14
16
18
20
12
Year 06
08
10
12
14
16
18
20
Employment
SOURCE: WWW.IBISWORLD.COM
p. 21
Products and services segmentation (2014)
Key External Drivers
Poverty rate
Access to credit
Consumer
Confidence Index
41.9%
World price of gold
Secured loans for
personal collateral
National
unemployment rate
58.1%
Merchandise sales
p. 4
SOURCE:
WWW.IBISWORLD.COM
SOURCE:
WWW.IBISWORLD.COM
Industry Structure
Life Cycle Stage
Mature
Regulation Level
Revenue Volatility
Low
Technology Change
Capital Intensity
Low
Barriers to Entry
Industry Assistance
Low
Industry Globalization
Concentration Level
Low
Competition Level
FOR ADDITIONAL STATISTICS AND TIME SERIES SEE THE APPENDIX ON PAGE 29
Heavy
Low
Medium
Low
Medium
Pawn Shops in the USNovember 2014 4
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Industry Performance
Executive Summary | Key External Drivers | Current Performance
Industry Outlook | Life Cycle Stage
Executive
Summary
The Pawn Shops industry has grown
strongly over the past five years thanks to
rising gold prices and changing consumer
perceptions. IBISWorld estimates that
revenue will increase at an average
annual rate of 3.2% to $6.6 billion in the
five years to 2014. Growth, however, has
slowed in recent years; gold prices have
declined since reaching a record high in
2011, and economic recovery has reduced
demand for pawn shop loans. During the
recession, pawn loans provided a quick
and easy way to obtain short-term loans.
Industry operators increasingly
capitalized on these consumers and
generated strong sales off of loans. While
merchandise sales have grown in line
with rising consumer spending, many
consumers are returning to the workforce
and no longer require pawn loans.
Revenue is consequently expected to rise
a mere 1.9% during 2014.
Accelerated by a surge in gold prices,
industry profit margins reached a high of
10.9% in 2011 and are estimated to fall to
9.6% in 2014. As the price of gold
increases, consumers enticed by higher
returns are more likely to pawn their gold
jewelry; consequently, demand for gold
jewelry rises among buyers, enabling
pawn dealers to raise prices and boost
profit. Moreover, the rising rate of defaults
on pawn loans amid persistent
unemployment bolstered earnings,
enabling stores to collect higher
transaction fees and generate additional
earnings by selling collected collateral.
However, during the latter half of the
five-year period, lower gold prices and
falling unemployment led to fewer
defaults as the US economy returned to
growth. Nevertheless, changing consumer
perceptions have expanded the pawn
shop’s market reach as popular shows
such as Pawn Stars gain popularity.
High-income consumers have increasingly
turned to pawn shops as a source of credit,
as many banking institutions tighten their
lending standards in light of the recent
economic downturn.
As economic recovery continues to
gain strength, industry revenue growth is
expected to slow. While retail sales will
rebound somewhat, sales generated from
pawn loans are projected to decrease
considerably as consumers become
equipped with heavier wallets and
lending standards become more relaxed.
In the five years to 2019, IBISWorld
forecasts that revenue will increase at an
average annual rate of 1.5%, reaching
$7.1 billion.
Poverty rate
This industry mainly attracts low-income
households (i.e. those below the poverty
line) that have limited income or low
credit scores to obtain large loans.
Consequently, a rise in the number of
households below the poverty line will
increase demand for pawn shops. The
poverty rate is expected to decline over
2015, posing a threat to the industry.
Access to credit
Consumers typically opt to use pawn
shop services when they lack access to
other forms of credit. Pawn shops charge
interest rates of about 20.0%, a
significantly higher rate than other forms
of credit As a result, demand for pawn
shops is negatively correlated to credit
access. Access to credit is expected to
improve during 2015.
Declining
gold prices and the recovering
economy will slow industry revenue growth
Key External Drivers
Pawn Shops in the USNovember 2014 5
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Industry Performance
Consumer Confidence Index
While some consumers may pawn items
with the intent to sell, a considerable
85.0% of consumers redeem their items,
according to the National Pawnbrokers
Association. Consequently, consumers
are less likely to pawn their items when
they are uncertain about the economy
and their ability to purchase items back.
As a result, industry demand is positively
tied to consumer confidence. Consumer
confidence is expected to rise during
2015, presenting a potential opportunity
for the industry.
World price of gold
Consumers are more likely to pawn their
gold jewelry when the price of gold is
high. While a high price of gold
translates to higher purchase costs,
these costs are passed on to customers
because demand is high and pawn shops
can charge higher prices. As a result,
gold price hikes positively impact
industry revenue and profit. The world
price of gold is expected to increase
slightly during 2015.
National unemployment rate
The national unemployment rate is
positively correlated with demand for
industry services. When unemployment
rises and consumers become short on
income, more households put up their
personal goods as collateral to obtain
cash for bills and other immediate
personal expenses. The national
unemployment rate has been on a
downward trend since 2011 and is
expected further decline through 2015.
Consumer Confidence Index
Poverty rate
16
24
12
% change
15
%
Key External Drivers
continued
14
13
12
Year 06
0
−12
−24
−36
08
10
12
14
16
18
20
−48
Year
08
10
12
14
16
18
20
SOURCE: WWW.IBISWORLD.COM
Pawn Shops in the USNovember 2014 6
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Industry Performance
Current
Performance
The recent gold rush, coupled with
persistent unemployment, led to a boom
in demand for the Pawn Shops industry.
Consequently, revenue is expected to
grow at an average annual rate of 3.2% to
$6.6 billion in the five years to 2014.
Despite economic improvement, many
cash-strapped consumers turned to pawn
Demand for loans and The Pawn Shops industry generates
revenue through two distinct channels:
retail services
Profit and
participation
stores for immediate relief, as
unemployment remained high through
2010. However, as economic conditions
continued to improve in subsequent
years, unemployment began to fall and
gold prices began to decline, bringing the
industry to a slowdown with a modest
1.9% increase expected during 2014.
As
banks tightened
their lending standards,
consumers turned to pawn
shops for loans
interest made through collateralized loans
and retail sales of defaulted or unwanted
items. Demand for both services is guided
by overall economic conditions; however,
demand among channels is not
harmonized. The effects of the recession
caused demand for loan services to
increase and demand for retail services to
decline. In addition to restrained
disposable incomes and high
unemployment, consumers were rebuffed
by credit lenders due to tightened lending
standards and slashed credit limits. These
factors combined made it increasingly
difficult for consumers to access credit.
However, as the economy began to regain
strength, evidenced by disposable incomes
returning to growth in 2010 and the
falling national unemployment rate, these
trends have reversed. Demand for
retailing services increased during the
latter half of the five-year period as
demand for loan services fell.
According to the National Pawnbroker
Association, about 85.0% of pawn loans
are repaid, indicating that consumers
retrieve their collateral. This factor also
indicates that about 15.0% of loans end
up in default, and pawnbrokers are able
to resell the collateral as merchandise.
The industry’s retailing services
represents an estimated 58.0% of
industry revenue. Contrary to loan
services, as consumer confidence waned
and per capital disposable incomes fell
3.6% in 2009, households actively cut
back on discretionary spending. This
spending included items sold by pawn
shops, such as jewelry, electronics and
antiques. However, as economic
conditions began to turn around,
demand for retailed items began to tick
upward, while demand for loan services
began to decline.
As part of the consumer lending services
sector, operators in the Pawn Shops
industry have relatively high profit
margins. Because pawn shops provide
simple and fast lending without the need
for credit checks, operators are able to
charge higher interest on their loans,
thus generating higher earnings.
Moreover, the recent gold rush boosted
margins to a high of 10.9% in 2011.
However, improving economic conditions
and falling gold prices in recent years
have contracted returns. The rate of
defaults fell and hurt returns, as
pawnbrokers were unable to collect
higher transaction fees. Brokers were
Pawn Shops in the USNovember 2014 7
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Industry Performance
Profit and
participation
continued
able to aid earnings by selling collateral,
as demand for merchandise increased.
Overall, industry profit is expected to rise
a moderate 0.8% from 2009 to total 9.6%
in 2014.
Major industry players have been
aggressively acquiring smaller players
over the past five years to expand their
market reach and limit competition. For
example, the industry’s largest player,
Cash America International, acquired
multiple small-scale pawn store chains
across the United States during the
period. Despite new entrants, the
Industry
developments
The industry’s expansion has also been
fueled by the emergence of a niche
market: luxury pawn shops. The
recession hit all classes of consumers;
people accustomed to great discretionary
spending had their hard-earned savings
evaporate. As a result, these consumers
have been driven to “high-class”
pawnbrokers that offer short-term but
large loans (often up to $100,000) on
more expensive collateral such as luxury
cars, watches and paintings. Most
consumers who use these services can
pay back the loans in time, but they
simply need the cash on-hand
immediately. Therefore, these niche
pawnshops generally target consumers
that need to liquidate their valuables
temporarily but in a timely manner.
Pawn shops have also gained further
cultural acceptance in the United States
industry has grown increasingly
concentrated, with a few large players
gaining a growing share of the market. As
a result, establishment growth has
outpaced enterprise growth over the past
five years, with establishments
anticipated to rise 2.3% per year on
average to 11,786 in the five years to
2014. Increasing store numbers also led
to a greater need for personnel, as
workers are needed to staff new stores.
IBISWorld estimates that the number of
employees will rise an average 1.8%
annually over the period to reach 28,946.
The
industry’s expansion
has been fueled by the
emergence of luxury
pawn shops
through the success of reality TV shows
centered on pawnbrokers’ dealings, such as
History Channel’s Pawn Stars and truTV’s
Hardcore Pawn. These shows have helped
bring prominence to some pawnbrokers,
while removing the mystique and sense of
distrust that once pervaded the reputation
of pawn shops. While NPA states that
reality TV shows do not “accurately reflect
the day to day transactions of an average
pawn shop in America,” these shows have
encouraged new consumers to consider
pawn shops as viable loan options.
Pawn Shops in the USNovember 2014 8
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Industry Performance
Improved economy
IBISWorld forecasts moderate growth for
the Pawn Shops industry over the five
years to 2019, with revenue projected to
increase at an average annual rate of 1.5%
to $7.1 billion. The industry will likely
experience steady demand throughout
the period, driven by cautious consumers
who continue to seek out discounted
goods at pawn shops to save money.
Furthermore, low-income households
will continue to comprise the industry’s
core consumers, keeping sales buoyant
and profit margins relatively stable, with
a slight 0.1% increase due to continued
consolidation among industry players.
Nonetheless, the improving economic
outlook is forecast to temper industry
demand, as consumers who were
previously forced into pawn shop
patronage will gain employment and opt
for alternative financing sources.
Low-income households largely drive
industry demand because they are the
main customers of pawn shops.
According to the National Pawnbrokers
Association, an average pawn customer
has an average annual household income
of $29,000, which is below the federal
poverty line for a family of four. These
low-income households are drawn to
industry operators because of the ease of
access to short-term loans and low price
points offered for goods sold via pawn
shops. In the five years to 2019,
IBISWorld projects that the number of
consumers below the poverty line will
decline an average 1.9% annually,
leveling off at about 13.6% in 2019.
Although declining, these households will
help drive industry sales, leading to
stable, albeit moderate, revenue growth
over the period.
The economy’s return to growth facilitated
steady improvement in spending conditions.
To this end, consumer confidence in the
economy and per capita disposable income
are forecast to rise at annualized rates of
3.8% and 2.4%, respectively, over the next
five years. Households are expected to
increasingly patronize pawn shops for
discretionary goods such as jewelry,
consumer electronics and antiques because
the industry generally offers discounted
prices on these products. In combination
with demand from low-income households,
this trend will enable the industry to
maintain its revenue growth over the next
five-year period, with revenue rising 1.8%
during 2015.
As the recovery from one of the most
disastrous economic slumps in US history
continues to gain momentum, industry
revenue growth is expected to slow. During
the recession, the industry prospered from
an influx of households that faced the brunt
of the credit crunch and used pawn shops
to obtain small loans. However, as the
economic recovered, the need for small
loans among middle-class consumers
lessened. Meanwhile, a return to relaxed
lending standards will enable households
to take advantage of large-scale loans
again, mitigating the need for smaller pawn
loans. Consequently, this trend will strip
the industry of the competitive advantage
that enabled it to achieve exceptional
Industry revenue
6
4
% change
Industry
Outlook
2
0
−2
Year 06
08
10
12
14
16
18
20
SOURCE: WWW.IBISWORLD.COM
Pawn Shops in the USNovember 2014 9
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Industry Performance
Improved economy
continued
growth over prior years. Additionally,
demand for used goods offered by pawn
shops will eventually fall as consumers
equip themselves with heavier wallets.
Households will likely pick up spending on
new and more expensive items rather than
Slowing growth
As demand for small loans and used
goods slowly declines, the industry will
likely have fewer new participants.
Additionally, the industry’s largest
players are anticipated to continue
acquiring smaller companies to gain
access to new markets. As a result,
IBISWorld forecasts that the number of
enterprises will increase at a mere 1.1%
per year on average during the period to
5,801 operators in 2019. Moreover, the
level of employment will exhibit marginal
growth over the next five years, at a
projected average annual rate of 1.4% to
31,076 employees.
As the industry slows, IBISWorld
projects that profit margins will also
used goods offered by pawn shops. These
renewed purchases will lead to revenue
leakage from the Pawn Shops industry
toward discount stores and big-box
retailers, which retail a wide range of new
goods at discounted prices.
Demand
for small loans
and used goods will
slowly decline, limiting
participation
exhibit slow growth. As larger companies
continue their acquisition activity and the
rate of new entrants decreases,
competition will increase and limit
profitability. Furthermore, the decline in
demand for pawn loan services will
continue to hamper profit margins. Slight
consolidation, however, will boost profit
slightly over the next five years.
Pawn Shops in the USNovember 2014 10
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Industry Performance
The industry is growing slower
than overall GDP growth
Life Cycle Stage
Industry operators are consolidating
Pawn shops have an established buyer market
% Growth in share of economy
Changes in technology are slow
20
Maturity
Quality Growth
Company
consolidation;
level of economic
importance stable
High growth in economic
importance; weaker companies
close down; developed
technology and markets
15
Key Features of a Mature Industry
Revenue grows at same pace as economy
Company numbers stabilize; M&A stage
Established technology & processes
Total market acceptance of product & brand
Rationalization of low margin products & brands
10
Quantity Growth
Many new companies;
minor growth in economic
importance; substantial
technology change
Commercial Banking
5
Credit Unions
0
Pawn Shops
Real Estate Loans & Collateralized Debt
Used Goods Stores
Decline
-5
Shrinking economic
importance
-10
-10
-5
0
5
10
15
20
% Growth in number of establishments
SOURCE: WWW.IBISWORLD.COM
Pawn Shops in the USNovember 2014 11
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Industry Performance
Industry Life Cycle
This
industry
is M
ature
The Pawn Shops industry is in the mature
stage of its life cycle, despite the
temporary growth experienced during
the recession. Over the 10 years to 2019,
industry value added, which measures
the industry’s contribution to the US
economy, is expected to increase at an
average annual rate of 2.2%. This rate
indicates that the industry is growing
roughly in line with the overall economy,
with US GDP growth projected to
increase an average 2.5% annually over
the same period. The trends of industry
consolidation, a stable buyer market and
slowing changes in technology also reflect
the characteristics of a mature industry.
The industry’s largest players have
actively acquired smaller players over the
past five years, leading to increased
concentration. By purchasing smaller
operations, large companies have gained
access to new markets with ease. As the
participation bubble that was created
during the recession slowly deflates over
the next five years, IBISWorld projects
that the industry’s consolidation activity
will continue into 2019.
The industry has an established
buyer’s market. Households in the
lowest income quintile are the core
market for pawn shops because these
households generally have limited
disposable income that they can spend.
Low-income households often find it
difficult to finance larger loans because
many do not have top-tier credit scores.
Consequently, consumers in the lowest
income quintile use pawn shops to
obtain small loans and purchase
household goods at discounted prices.
The use of technology is limited for
pawn shops, and technology changes
have started to slow in the industry.
Automation in various processes (e.g.
electronic cash registers and computer
systems to track inventory) has already
taken place and further changes are not
expected in the next five years.
Pawn Shops in the USNovember 2014 12
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Products & Markets
Supply Chain | Products & Services | Demand Determinants
Major Markets | International Trade | Business Locations
Supply Chain
KEY BUYING INDUSTRIES
9901
Consumers in the US
Consumers obtain collateralized loans from pawn shops and also purchase various used
merchandise.
KEY SELLING INDUSTRIES
9901
Products & Services
Consumers in the US
Consumers supply various goods to this industry through direct sale or by defaulting on their
loans, which results in their collateral being confiscated.
Products and services segmentation (2014)
41.9%
Secured loans for
personal collateral
58.1%
Merchandise sales
Total $6.6bn
SOURCE: WWW.IBISWORLD.COM
The Pawn Shops industry specializes in
providing short-term loans made on the
pledge of tangible personal property. When
customers pay back the loan, their personal
property is returned to them. If the
customer chooses not to redeem his or her
collateral or pay back the loan, there is no
credit consequence, but the collateralized
item is then sold to retail consumers.
unemployment, more consumers needed
quick cash to pay off bills or make a
one-time payment. To this end, this
service represents an estimated 41.9% of
industry income. Demand for pawn loans
is expected to decline in the next five
years as disposable incomes continue to
grow and the national unemployment
rate falls at an accelerated pace.
Secured loans for personal collateral
Pawn loans are made on everything from
jewelry to electronics. In the five years to
2014. Demand for loan services waned as
the economy returned to growth. When
the economy fell into recession and credit
markets tightened, many consumers
looked to pawn shops to obtain shortterm loans. Additionally, with high
Merchandise sales
Merchandise sales are expected to
account for 58.1% of industry revenue in
2014. When a consumer does not redeem
their collateralized item, pawn owners
sell the item, creating another revenue
channel for the shop. In addition, pawn
shops sell goods that have been sold to
them directly from consumers. These
Pawn Shops in the USNovember 2014 13
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Products & Markets
Products & Services
continued
items include a multitude of objects, from
electronics to jewelry to antiques. From
2009 to 2014, merchandise sales as a
percentage of revenue fluctuated. Prior to
the recession, merchandise sales were
thriving as many stores had a large
variety of goods to sell and consumer
spending was high. However, during
2009, merchandise sales declined as
many consumers reduced their
discretionary purchases. Moreover, on
the back of rising gold prices, many firms
experienced an increase in jewelry sales,
which helped offset the overall decline in
retail revenue. Recently, merchandise
sales have been on the rise again.
Consumers are slowly increasing their
spending, but are looking for a good
value; therefore, they demand more used
goods such as those sold at pawn shops.
Demand
Determinants
External economic factors heavily
influence demand for pawn shops. For
instance, when the national
unemployment rate is high, many
consumers are short on income and use
their personal goods as collateral to
obtain cash to pay for bills and other
immediate personal expenses. However,
when the unemployment rate is low,
fewer consumers need quick cash. When
unemployment was on the rise, the Pawn
Shops industry experienced an increase
in demand.
Along with national unemployment rate,
per capita disposable income influences
industry revenue. With lower disposable
income, many consumers turn to pawn
shops for short-term loans, especially if they
have incomes below the poverty line and
have difficulty qualifying for larger loans.
However, an increase in disposable income
can also benefit the industry as pawn shops
sell a variety of used and generally valuable
goods that are in higher demand during
times of flourishing income levels.
Demand for pawn loans is also
influenced by the cost of alternative
sources of funding. Pawn shops compete
with other quick loan providers,
including credit card issuers that offer
revolving credit and consumer lending
services that provide payday loans. Pawn
loans are generally in higher demand
when credit markets are tight, consumer
lending standards are high, and the
unemployment rate is rising. Consumers
only need to supply a good that can be
used as collateral and a photo
identification card in order to obtain the
pawn loan. These loans are more
obtainable for many people, especially for
those who have low credit scores.
Major Markets
IBISWorld expects households to account
for an estimated 99.0% of the market,
while the remaining 1.0% of the market
includes used goods retailers and
commercial buyers. Within the
household segment, there are four main
markets separated by age groups:
Generation X (individuals aged 29 to 43),
Generation Y (individuals aged 10 to 28),
baby boomers (individuals aged 44 to 62)
and consumers aged 63 and older.
Generation X
Generation X has the most significant
effect on the industry; it is estimated to
represent 35.0% of the market. This
demographic spends a higher proportion of
its disposable income to purchase goods as
they raise families, and money can easily
become scarce. According to the National
Pawnbrokers Association, the average
pawn customer is 36 years old with an
average household income of $29,000.
Pawn Shops in the USNovember 2014 14
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Products & Markets
Major Markets
continued
Major market segmentation (2014)
12%
Individuals aged
63 and older
1%
Other
35%
Generation X
22%
Generation Y
Total $6.6bn
30%
Baby boomers
Baby boomers
Baby boomers are another influential age
group that represents about 30.0% of the
market. This demographic has traditionally
preferred more luxurious products. This
preference, which was largely caused by
long-term employment and access to easy
credit, reversed in the five years to 2014 as
the economy struggled to recover. High
unemployment and tight credit
conditions left this demographic stranded
with less discretionary income. This
trend has resulted in baby boomers
finding new ways to access cash for quick
one-time payments.
International Trade
Pawn shops supply only to the domestic
market; therefore, there is no
international trade for this industry.
SOURCE: WWW.IBISWORLD.COM
Generation Y
Generation Y represents about 22.0% of
the market, and this segment
experienced slight growth over the five
years to 2014. With high unemployment
in the past three years and with many of
these individuals unable to find jobs and
obtain loans in this tight economy, the
younger generation has increased their
demand for pawn loans. Also, some
Generation Y consumers still like
expensive items, but they are unable to
afford the high price tags, so they shop
at pawn shops in order to purchase
higher-end products such as electronics.
Pawn Shops in the USNovember 2014 15
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Products & Markets
Business Locations 2014
West
New
England
AK
0.8
Great
Lakes
WA
ND
MT
4.4
Rocky
Mountains
ID
OR
0.3
West NV
3.6
0.2
SD
0.1
WY
0.3
MN
0.3
0.1
Plains
CO
1.0
KY
0.5
9
OK
1.2
NC
2.3
TN
AZ
NM
1.5
0.2
Southwest
TX
24.2
HI
0.2
Additional States (as marked on map)
1 VT
2 NH
3 MA
4 RI
5 CT
6 NJ
7 DE
8 MD
0.1
0.5
0.2
0.2
0.1
0.1
SC
Southeast
0.7
MS
AL
1.0
2.5
GA
3.2
0.5
LA
3.0
FL
9.6
Establishments (%)
0.1
0.1
AR
8
0.5
2.8
5.8
7
WV VA
0.5
2.9
2.2
CA
West
10.5
MO
KS
0.6
OH
4.9
2.1
6
0.5
IN
IL
0.1
UT
PA
1.4
0.2
0.2
1 2
3
NY
0.3
5 4
MI
0.2
IA
NE
0.5
WI
ME
MidAtlantic
9 DC
0.2
Less than 3%
3% to less than 10%
10% to less than 20%
20% or more
SOURCE: WWW.IBISWORLD.COM
Pawn Shops in the USNovember 2014 16
WWW.IBISWORLD.COM
Products & Markets
Distribution of establishments vs. population
30
20
10
Southwest
Southeast
Rocky Mountains
Plains
New England
Mid-Atlantic
Great Lakes
0
West
IBISWorld estimates that the Southeast
region accounts for 29.5% of total
industry establishments in 2014. Over
the five years to 2014, the presence of
pawn shops has increased along with the
population in order to serve increasing
demand. This region accounts for onequarter of the national population, but
demographics suggest that these
Americans earn the lowest average per
capita personal income in the United
States. The percentage is higher in this
region, since industry establishments
typically target households with lower
incomes, as pawn loans are an easy way
to receive quick cash without a credit
check or a banking account.
IBISWorld estimates that the
Southwest region accounts for 27.4% of
industry establishments. According to
the US Census Bureau, states such as
Texas, New Mexico and Arizona have
average family income levels below the
national average. The average
household income of a pawn shop
customer is $29,000 a year, so these
states present growth opportunities for
pawn shops. Consequently, the
Southwest represents the second largest
region for pawn shop establishments.
The Great Lakes region also has a high
number of pawn shops because it has
many low income areas that are similar
to the Southwest region.
In 2014, the West region is expected to
account for 15.1% of the population, with
its average per capita personal income
levels coming in above the national
average. California accounts for 12.1% of
%
Business Locations
Establishments
Population
SOURCE: WWW.IBISWORLD.COM
the population, but it only accounts for
6.0% of industry establishments.
In 2014, IBISWorld estimates that the
Mid-Atlantic region accounts for 1.4% of
total industry establishments. Unlike
many other retail and loan industries, the
region’s establishment share does not
correlate with its population share of
16.0%. There are a number of reasons that
explain this retail anomaly. Pawn shops
primarily target households with lower
incomes. Information from the Bureau of
Economic Analysis indicates that the
Mid-Atlantic region has the second
highest level of per capita personal income
in the United States, behind New England,
which also has an establishment share
well below its population share.
WWW.IBISWORLD.COM
Pawn Shops in the US November 2014 17
Competitive Landscape
Market Share Concentration | Key Success Factors | Cost Structure Benchmarks
Basis of Competition | Barriers to Entry | Industry Globalization
Market Share
Concentration
Level
Concentration
in
this industry is L ow
Key Success Factors
IBISWorld
identifies
250 Key Success
Factors for a
business. The most
important for this
industry are:
The Pawn Shops industry has low market
share concentration. IBISWorld
estimates that the two largest players,
Cash America International and EZCorp
Inc., will account for 22.6% of industry
revenue in 2014. Major players have
gained market share over the past five
years thanks to heave acquisition activity.
Nevertheless, the industry’s low barriers
to entry and low capital requirements
enable many smaller players to
participate in the pawn shop market. The
majority of businesses are family owned,
with low employment, and they
successfully satisfy the local demand in
their community. In 2014, IBISWorld
estimates that each establishment has an
average of two to three employees.
Attractive product presentation
Arranging used items in attractive
ways will entice consumers to purchase
more products.
Ability to effectively manage risk
It is important for firms to manage
risk and expect some defaults on their
pawn loans.
Ability to control stock on hand
Operators will benefit from controlling
inventory by only purchasing items that
will sell and leave room for items gained
from customers lost collateral.
Reputation
As with any client service-related
industry, a pawnbroker’s reputation is
affected by the ability to provide honest
and unbiased advice, which will motivate
satisfied borrowers to recommend the
pawn shop.
Licensing
It is increasingly important for
pawnbrokers to have the necessary
licenses to conduct business. Licensed
pawnbrokers need to provide further
evidence that they are upholding
regulatory standards. For additional
information see Regulation and Policy.
Cost Structure
Benchmarks
Profit
Profit (earnings before interest and taxes) is
relatively high within this industry;
IBISWorld estimates that profit accounts
for 9.6% of industry revenue in 2014. A
large percentage of industry profit is
derived from pawn loan interest charges.
Loan terms are typically one to three
months in length, with customers expected
to pay about 10.0% to 20.0% in loanservicing fees. These interest charges are
high compared with an average bank loan;
however, no banking account or credit
check is needed to receive these loans; they
only require an item to be used as collateral.
Highly knowledgeable of
industry products
Workers must know the market value
of industry goods and be able to
verify the authenticity of the products
they pawn.
Profit is also significantly higher than the
average retail or loan service establishment
because pawn shops generally receive
high-value items as collateral. These items
can then be sold with a significant markup
if the consumer fails to pay their loan. Also,
some consumers will sell off their expensive
used items directly to pawn owners who can
retail these used goods at a substantial
markup. However, profit margins have
edged downwards in the past five years due
to a decline in pawn loan transactions as
demand fell on the back of improved
consumer confidence and growing
disposable incomes.
WWW.IBISWORLD.COM
Pawn Shops in the US November 2014 18
Competitive Landscape
Purchases
Purchases account for the largest
percentage of the industry’s cost
structure at an estimated 48.1%. In
addition to providing loans, pawn shops
buy goods directly from customers who
want to sell off their expensive used
goods. High purchasing costs are typical
for an industry that retails goods
because it is essential for stores to have
a sufficient quantity and range of stock
on hand. Moreover, rising gold prices
have inflated purchase costs over the
past five years.
Wages
Wages are the second-highest cost for
this industry, accounting for 13.1% of
revenue. They have remained relatively
consistent during the past five years, with
a slight decrease thanks to growing
demand. While new shops have opened,
stores still average about two to three
employees per establishment. Employees
engage in stocking shelves, operating
cash registers, organizing store displays,
and providing customer service. Also, at
least one worker at each store has to be
able to evaluate items to determine their
worth. The evaluation can be outsourced,
but generally one employee is able to
appraise jewelry and other goods to
determine their value and if the item is
counterfeit or not.
Other
Operators incur a variety of other
expenses, including administrative,
marketing, rent and government
regulation costs such as licensing. Most
of these costs have remained
unchanged; however, some stores
increased their marketing expenditure
during the recession in order to increase
consumers’ awareness of the availability
of pawn loans during times of tight
Sector vs. Industry Costs
Average Costs of
all Industries in
sector (2014)
Industry Costs
(2014)
100
80
13.1
10.7
22.9
60
1.3
40
2.3
48.1
1.8
1.6
20
■ Profit
■ Wages
■ Purchases
■ Depreciation
■ Marketing
■ Rent & Utilities
■ Other
9.6
19.1
Percentage of revenue
Cost Structure
Benchmarks
continued
41.9
6.5
1.9
19.2
0
SOURCE: WWW.IBISWORLD.COM
WWW.IBISWORLD.COM
Pawn Shops in the US November 2014 19
Competitive Landscape
Cost Structure
Benchmarks
continued
credit standards. Industry players must
also account for depreciation of their
appraisal equipment and display, which
account for about 1.6%. Other industry
capital includes computers and
security systems.
Basis of Competition
Competition between firms that provide
pawn loans primarily concerns the level
of service charges to borrowers. The
structure and arrangements related to
the lending agreements are another point
of competition. Consumers are expected
to visit pawn shops that offer the most
competitive lending agreement. Firms
also compete on reputation. Customers
must trust that pawnbrokers will keep
their items used as collateral until the
loan is paid back. A negative reputation
may cause a pawn shop to lose revenue.
In addition to lending terms and
service, firms compete in regard to
merchandise. Since pawn shops sell a
large array of items, each store competes
on their specific offerings in product
segments such as electronics and
jewelry. Along with merchandise, each
store competes on the prices of their
used goods.
Pawn shops compete with themselves,
and they also compete against other loan
providers such as commercial banks,
credit card issuers and consumer lending
establishments. These firms compete on
lending agreements, the amount of loan
offered and flexibility with repayments.
During the recession when credit markets
tightened, many external competitors
increased their lending standards. During
this period, pawn shops offered loans to
those who did not meet those standards.
Level & Trend
ompetition
C
in
this industry is
Mediumand the
trend is S
teady
Barriers to Entry
Level & Trend
arriers to Entry
B
in this industry are
Mediumand S
teady
The Pawn Shops industry has medium
barriers to entry, with medium capital
requirements and required state licenses
that may prohibit firms from entering
the market. Nevertheless, technology
change is low and the industry is
growing, which may entice more firms to
enter the market.
Establishment set-up costs for pawn
shops are also medium. Each
establishment needs to obtain a license
with the state, and sometimes with the
municipality. Stores need to be
equipped with cash registers and
point-of-sale systems. Also, at least one
employee must be able to appraise
items that enter the store to give out
appropriate loans and price
merchandise accordingly. In addition,
many firms operate pawn shop software
to keep track of their existing loans.
Barriers to Entry checklist
Competition
Concentration
Life Cycle Stage
Capital Intensity
Technology Change
Regulation & Policy
Industry Assistance
Level
Medium
Low
Mature
Low
Low
Heavy
Low
SOURCE: WWW.IBISWORLD.COM
The industry faces medium
competition, which may deter new
entrants. The industry competes
internally with other pawnbrokers and
externally with commercial banks, credit
card issuers and consumer lending shops
such as payday lenders. Competition is
expected to remain moderate in the next
five years.
WWW.IBISWORLD.COM
Pawn Shops in the US November 2014 20
Competitive Landscape
Industry
Globalization
Level & Trend
lobalization
G
in this
industry is L owand
the trend is S
teady
The Pawn Shops industry has a low level
of globalization. This industry is
characterized by numerous small players
that supply the domestic market and do
not have the resources to operate globally.
Nevertheless, some industry players such
as EZ Corp Inc. have expanded their store
presence into Mexico and Canada, with
Cash America operating an online pawn
service in Europe.
Pawn Shops in the USNovember 2014 21
WWW.IBISWORLD.COM
Major Companies
Cash America International Inc. | EZCorp Inc. | Other Companies
Major players
(Market share)
EZCorp Inc. 8.2%
77.4%
Other
Cash America International Inc. 14.4%
Player Performance
Cash America
International Inc.
Market share: 14.4%
Industry Brand Names
Cash America Pawn
Cashland
Mr. Payroll
SuperPawn
CashNetUSA
SOURCE: WWW.IBISWORLD.COM
Based in Fort Worth, TX, Cash America
International Inc. (Cash America) began
providing secured nonrecourse loans
(pawn loans) to individuals in 1984
through retail service locations and has
since expanded to electronic distribution
platforms. Internationally, the company
manages retail stores domestically and
online pawn services across the United
Kingdom, Australia and Canada. The
company offers short-term singlepayment loans, longer-term multipayment installment loans and credit
services. Cash America employs about
7,637 workers, 6,213 of whom work at
their retail locations.
The company operates in two
segments: retail services and
e-commerce. Retail services include
pawn lending, consumer loans, check
cashing and other ancillary services, such
as money orders, wire transfers and
pre-paid debit cards. The company’s
stores that offer pawn loans are industryrelevant; these loans are generally
short-term (30 to 90 days) and made on
the pledge of tangible personal property.
Cash America operates about 1,006 retail
locations across the United States and
Mexico, 829 of which are located in the
United States and participate in pawn
lending. The company also operates
online pawn loans across the United
Kingdom and other foreign countries,
however, the United States accounts for
the majority of industry revenue at about
three-fourths of the total.
In October 2012, Cash America Inc. of
Nevada acquired a total of nine pawn
lending locations in Arizona, previously
owned by Cash Corporation, Pawn Corp
#1 Inc., Pawncorp #2 Inc. and Pawncorp
#4 Inc. The acquisition cost about $15.4
million. In September of the same year,
Cash America International Inc. (US industry-specific) – financial
performance*
Year
Revenue
($ million)
(% change)
Operating Income
($ million)
2009
703.6
N/C
108.4
N/C
2010
756.2
7.5
129.6
19.6
2011
898.5
18.8
204.7
57.9
2012
945.3
5.2
184.2
-10
2013
881.2
-6.8
130.9
-28.9
2014
956.3
8.5
123.4
-5.7
(% change)
*Estimates
SOURCE: ANNUAL REPORT AND IBISWORLD
Pawn Shops in the USNovember 2014 22
WWW.IBISWORLD.COM
Major Companies
Player Performance
continued
Player Performance
EZCorp Inc.
Market share: 8.2%
Industry Brand Names
EZPawn
Value Pawn
the company acquired an additional
25-store chain of pawn lending outlets in
Kentucky, North Carolina and Tennessee,
for about $55.1 million. In 2013, the
company acquired a 41-store chain of
pawn locations in Texas and a 34-store
chain of pawn stores located across
Atlanta and North Carolina. While Cash
America has been aggressively acquiring
smaller players and expanding its USbased retail network, the company’s total
number of retail outlets has recently
declined, largely due to Cash America’s
decision to restructure its Mexico-based
operations; in August 2014, the company
completed the divesture of its 47 pawn
lending locations in Mexico for $18.5
million. The company also divested five
Colorado locations in $3.0 million during
that month.
Based in Austin, TX, EZCorp Inc. is a
provider of specialty consumer financial
services. It operates pawn stores in the
United States under the EZPawn and
Value Pawn brands, and in Mexico under
the Empeno Facil and Empene Su Oro
brands. It also operates short-term
consumer loan stores in the United States
under the EZMoney brand, and under the
CashMax brand n Canada. At its pawn
stores, the company offers pawn loans
and sells merchandise forfeited from its
pawn lending activities or purchased
directly from consumers. The company
operates more than 1,342 branches
throughout the United States, Mexico
and Canada. Its average pawn loan is
about $120.00. The majority of US pawn
loans earn 20.0% per month.
In 2012, the company acquired about
28 pawn stores across Texas, Florida,
Minnesota and Georgia, eight buy-andsell stores in Virginia, Pennsylvania and
Canada, and a further 15 financial
service stores in Hawaii and Texas.
EZCorp also invested in a number of
companies in Mexico and in the United
Kingdom. The company’s aggressive
expansion activity has supported its fast
penetration of the market; EZCorp’s
Financial performance
In the five years to 2014, the company’s
US-based industry-specific revenue is
anticipated to increase at an average
rate of 6.3% per year to $956.3 million.
Revenue flourished during the period
primarily due to higher average
consumer loan balances but also because
of higher average pawn loan balances
and higher merchandise sales in the
retail division.
EZCorp Inc. (US industry-specific) – financial performance*
Year**
Revenue
($ million)
(% change)
Operating Income
($ million)
(% change)
2009
313.0
N/C
76.4
N/C
2010
380.9
21.7
104.3
36.5
2011
440.9
15.7
133.8
28.3
2012
502.1
13.9
141.7
5.9
2013
532.3
6.0
117.3
-17.2
2014
546.3
2.6
76.9
-34.4
Estimates; **Year end September
SOURCE: ANNUAL REPORT AND IBISWORLD
Pawn Shops in the USNovember 2014 23
WWW.IBISWORLD.COM
Major Companies
Player Performance
continued
market share has grown considerably
over the past five years.
Financial performance
In the five years to fiscal 2014, company
revenue is expected to rise at an average
annual rate of 11.8% per year to reach
$546.3 million in 2014. The company’s
good fortunes are closely tied to the
increased pawn loan activity it
experienced during the period, as well as
its continual opening and acquisition of
pawn stores and other related services.
During 2010, pawn operations fell
because of a decline in pawn service
charges and merchandise and jewelry
Other Companies
The Pawn Shops industry has a few large
players that operate on a national scale.
However, the majority of the industry
consists of a large number of small and
privately owned operations that cater to
their local community or region. While
operators must obtain licenses and are
subject to significant state and municipal
regulations, the industry’s low investment
requirements have enabled many small
players to participate in the pawn shop
market. To this end, IBISWorld estimates
that the majority of industry
establishments will have fewer than three
employees per location in 2014.
scrapping sales. The company also
opened seven new US pawn stores and
acquired 16 US pawn stores, which ate
into profit margins. Loan yields increased
as the company experienced higher loan
redemption rate and merchandise sales
also rose.
Company profit fared relatively well
during the period, although considerable
contraction has occurred over the past
two years due to increased acquisition
activity and an expected slowdown in
demand for pawn loan services.
Moreover, expenses such as depreciation
costs rose slightly, further pressuring
profit margins.
First Cash Financial Services Inc.
Estimated market share: 4.9%
Established in 1988, First Cash
Financial Services Inc. (First Cash) is
a pawn shop operator currently
headquartered in Texas. The
company has over 800 locations
dispersed across the United States and
Mexico. However, First Cash only
operates in 12 US states, including
Indiana and Kentucky, with 309
locations. In 2014, IBISWorld
estimates that the company’s US
industry-related revenue will reach
$324.8 million.
Pawn Shops in the USNovember 2014 24
WWW.IBISWORLD.COM
Operating Conditions
Capital Intensity | Technology & Systems | Revenue Volatility
Regulation & Policy | Industry Assistance
Capital Intensity
Level
The level
of capital
intensity is L ow
This industry exhibits a moderate level of
capital intensity. For every $1.00 spent
on labor, the industry is expected to
spend about $0.12 in capital. The Pawn
Shops industry provides loans to
consumers and receives an item of
personal property to be put on hold as
collateral. Pawn shops also earn revenue
by selling used items that they obtain
from defaulted loans or direct purchases.
Capital expenditures are related to
fixtures and fittings, cash registers and
point-of-sale (POS) systems. Firms
also have to invest in expensive
security systems in order to keep their
merchandise and collateralized items
safe from theft. The industry also
requires computers and software to
keep track of loan agreements. Labor
Capital intensity
Capital units per labor unit
0.5
0.4
0.3
0.2
0.1
0.0
Economy
Finance and
Insurance
Pawn Shops
Dotted line shows a high level of capital intensity
SOURCE: WWW.IBISWORLD.COM
costs are an integral and continuous
expenditure for the overall industry.
Employees participate in stocking
Tools of the Trade: Growth Strategies for Success
Investment Economy
Recreation, Personal Services,
Health and Education. Firms
benefit from personal wealth so
stable macroeconomic conditions
are imperative. Brand awareness
and niche labor skills are key to
product differentiation.
Information, Communications,
Mining, Finance and Real
Estate. To increase revenue
firms need superior debt
management, a stable
macroeconomic environment
and a sound investment plan.
Credit Unions
Used Goods Stores
Traditional Service Economy
Wholesale and Retail. Reliant
on labor rather than capital to
sell goods. Functions cannot
be outsourced therefore firms
must use new technology
or improve staff training to
increase revenue growth.
Capital Intensive
Labor Intensive
New Age Economy
Pawn Shops
Commercial Banking
Real Estate Loans & Collateralized Debt
Change in Share of the Economy
Old Economy
Agriculture and Manufacturing.
Traded goods can be produced
using cheap labor abroad.
To expand firms must merge
or acquire others to exploit
economies of scale, or specialize
in niche, high-value products.
SOURCE: WWW.IBISWORLD.COM
Pawn Shops in the USNovember 2014 25
WWW.IBISWORLD.COM
Operating Conditions
Capital Intensity
continued
shelves and customer service, and at
least one staff member needs to be
able to evaluate the worth of goods
brought in by customers. This
practice can include appraising jewelry
and electronics.
Technology
& Systems
Most of the technological improvements
in this industry have enabled better
management of operations and
inventory. These improvements include
computer scanning cash registers and
automated inventory equipment.
Technology at the checkout has led to
computerized point-of-sale equipment,
which controls and records
merchandising, distribution, sales and
stock markdowns.
With losses incurred as a result of
theft, retailers employ security and loss
prevention advancements. These
technologies include closed-circuit TV
cameras and signature-capture
technology (this is used at the POS
terminal for credit card transactions).
Security is highly important for this
industry since firms generally retail
expensive goods that can be an easy
target for theft. Customers need to be
able to trust that pawn shops can keep
their item of collateral safe while they
take out a loan.
In addition to managing stock and
completing transactions, firms own
software systems to keep track of their
loans and evaluate merchandise that a
consumer brings in to sell. Pawn shop
software continues to be developed, and
this technology will become more
advanced in the next five years.
Moreover, some companies have
expanded to offer online pawn services.
For example, Cash America
International now generates about half
of its revenue online.
The Pawn Shops industry’s revenue has a
low level of volatility because it displays
both pro-cyclical and counter-cyclical
demands. During times of high economic
growth, retail sales for pawn shops
increase and the industry supplies a high
number of goods to provide consumers.
During slow economic growth, the
of
Technology
Change is L ow
Revenue Volatility
Level
The level
of
Volatility is L ow
A higher level of revenue
volatility implies greater
industry risk. Volatility can
negatively affect long-term
strategic decisions, such as
the time frame for capital
investment.
When a firm makes poor
investment decisions it
may face underutilized
capacity if demand
suddenly falls, or capacity
constraints if it rises
quickly.
Volatility vs Growth
1000
Revenue volatility* (%)
Level
The level
Hazardous
Rollercoaster
100
10
Pawn Shops
1
0.1
Stagnant
–30
–10
Blue Chip
10
30
50
70
Five year annualized revenue growth (%)
* Axis is in logarithmic scale
SOURCE: WWW.IBISWORLD.COM
Pawn Shops in the USNovember 2014 26
WWW.IBISWORLD.COM
Operating Conditions
Revenue Volatility
continued
industry faces higher demand for pawn
loans, and revenue is derived from loan
charge increases. The industry has
experienced continued growth in the past
five years as unemployment has been
high and consumers have looked for
alternative outlets for loans as credit
markets remain tight.
Regulation & Policy
Pawn shops face many regulations and
laws. Industry establishments are
subject to the same federal laws
designated for financial institutions. As
a result, pawn shops are subject to the
Patriot Act, Truth-in-Lending Act, Bank
Secrecy Act and other Internal Revenue
Service regulations.
Industry establishments are also
regulated by the states and municipalities
in which they are located, and they
generally must be licensed by the state.
States regulate various aspects of pawn
loans, such as the service charges and
interest rates that a pawn lending
locations may charge and the maximum
amount of a pawn loan. States also
regulate the minimum and maximum
term of a pawn loan, the content and
format of the pawn ticket, and the length
of time after a loan default that a pawn
lending location must hold a pawned
item before disposing of it. Failure to
observe a state’s legal requirements for
pawn loans may cause the pawn shop to
lose its pawn license in that state and
incur other civil and criminal penalties.
Pawn shops are subject to municipal
regulations that may require local
licenses or permits and specific
recordkeeping procedures. Many pawn
shops also report the goods held to secure
pawn loans or purchased goods to local
law enforcement agencies in case any of
these items have been reported as stolen.
Each pawn shop that handles firearms
must also comply with the Brady
Handgun Violence Prevention Act (the
Brady Act). The Brady Act requires that
federally licensed firearms dealers
conduct a background check in
connection with any disposition of
handguns. In addition, pawn shops must
comply with the regulations of the US
Department of Justice’s Bureau of
Alcohol, Tobacco and Firearms that
require each pawn lending location
dealing in guns to maintain a permanent
written record of all receipts and
dispositions of firearms. IBISWorld has
provided information on a few states for
a comparative basis.
Level & Trend
he level of
T
Regulation is
Heavyand the
trend is S
teady
Texas
The Texas Pawnshop Act provides the
Office of Consumer Credit Commissioner
with the primary responsibility to
regulate pawn shops and enforce laws
relating to pawn shops in Texas. Firms
are required to provide the Texas
Consumer Credit Commissioner with
copies of information, documents and
reports that it is required to file with the
Securities and Exchange Commission.
The Act establishes the maximum
allowable service charge rates based on
the amount financed per pawn loan. It
does this by prescribing the maximum
allowable rates of pawn service charges
that pawnbrokers in Texas may charge
for the lending of money within each of
four stratified range of loan amounts.
The Texas Consumer Credit
Commissioner may, after notice and
hearing, suspend or revoke any license
for a Texas pawn shop upon finding that
any fees or charges have not been paid. It
can also suspend or revoke a license if the
licensee violates (whether knowingly or
unknowingly without due care) any
provisions, regulation or order of the
Texas Pawnshop Act. Finally, it may
suspend or revoke a pawn shop’s license
if any fact or condition exists which, if it
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Operating Conditions
Regulation & Policy
continued
had existed at the time the original
application was filed for a license, would
have justified the Commissioner to
refusing this license.
Under the Texas Pawnshop Act, a
pawnbroker may not accept a pledge
from a person under the age of 18, make
any agreement requiring the personal
liability of the borrower or accept any
waiver of any right or protection
accorded to a pledger under the Texas
Pawnshop Act. They must also not fail to
exercise reasonable care to protect
pledged goods from loss or damage, fail
to return pledged goods to a pledger
upon payment of the full amount due,
make any charge for insurance in
connection with a pawn transaction or
enter into any pawn transaction that has
a maturity date of more than one month.
Finally, the Act forbids operators from
displaying disposition in storefront
windows or sidewalk display cases,
pistols, swords, canes, blackjacks and
similar weapons, operating a pawnshop
between the hours of 9:00 p.m. and 7:00
a.m. or purchasing used or secondhand
personal property or certain building
construction materials unless a record is
established containing the name, address
and identification of the seller, a
complete description of the property,
including serial number, and a signed
statement that the seller has the right to
sell the property.
Florida
The Florida Pawnbroking Act provides
for the licensing and bonding of
pawnbrokers in Florida and for the
Department of Agriculture and Consumer
Services’ Division of Consumer Services
to investigate the general fitness of
applicants and to regulate pawn shops in
the state. The statute limits the pawn
service charge that a pawnbroker may
collect to a maximum of 25.0% of the
amount advanced in the pawn for each
30-day period of the transaction. The law
also requires pawnbrokers to maintain
detailed records of all transactions and to
deliver these records to the appropriate
local law enforcement officials. Among
other things, the statute prohibits
pawnbrokers from falsifying or failing to
make entries on pawn transaction forms,
refusing to allow appropriate law
enforcement officials to inspect their
records, failing to maintain records of
pawn transactions for at least two years,
making any agreement requiring the
personal liability of a pledger and failing
to return pledged goods upon payment in
full of the amount due (unless the
pledged goods had been taken into
custody by a court or law enforcement
officer or otherwise lost or damaged). It
also prohibits them from engaging in
title loan transactions at licensed
pawnshop locations and from entering
into pawn transactions with a person who
is under the influence of alcohol or
controlled substances, a person who is
under 18, or a person using a name other
than his own name or the registered
name of his business.
Nevada
The Nevada statute that governs
pawnbrokers establishes a maximum
allowable interest rate of 10.0% per
month for pawn transactions and allows
an initial charge of $5.00 in addition to
interest. All pledged property must be
held for redemption for at least 120 days
before it can be offered for sale to the
public. The statute also requires that
certain bookkeeping records be
maintained; that pawn transaction
information be reported to local law
enforcement agencies; and it establishes
a procedure for law enforcement officials
to place a hold on property alleged to be
related to criminal activity.
The Nevada law also prohibits
pawnbrokers from making false entries in
their books or records, making false
reports to law enforcement agencies,
Pawn Shops in the USNovember 2014 28
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Operating Conditions
Regulation & Policy
continued
removing pledged property from their
business premises unless specifically
authorized under the statute, and
receiving pledged property from certain
persons, including a person who is under
18 or intoxicated.
Industry Assistance
The National Pawnbrokers Association
(NPA) is the main trade association that
represents pawnbrokers in the United
States. The association provides
professional and educational
development through meetings,
conferences, and seminars each year. The
NPA is also active in educating the media
and government officials on the positive
aspects that the industry offers the
general public. Each year, the association
holds an annual legislative conference in
Washington DC to allow pawnbrokers to
educate members of congress about the
industry. Several state associations, such
as the California Pawnbrokers
Associations also exist. Moreover, the
industry benefits from industry-specific
trade shows and exhibitions, such as
Pawn Expo.
Level & Trend
he level of
T
Industry Assistance
is L owand the
trend is S
teady
Pawn Shops in the USNovember 2014 29
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Key Statistics
Industry Data
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Revenue
($m)
5,489.6
5,470.6
5,414.0
5,480.2
5,664.7
5,908.2
6,138.4
6,355.8
6,506.3
6,628.0
6,744.0
6,837.4
6,874.2
6,998.2
7,140.3
Annual Change
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Revenue
(%)
-0.3
-1.0
1.2
3.4
4.3
3.9
3.5
2.4
1.9
1.8
1.4
0.5
1.8
2.0
Industry
Value Added
($m)
1,335.2
1,331.4
1,321.1
1,348.7
1,390.3
1,461.1
1,593.5
1,618.4
1,615.0
1,610.4
1,635.7
1,660.1
1,674.8
1,696.4
1,723.3
Establishments
9,427
9,621
9,752
10,122
10,530
10,879
11,257
11,522
11,631
11,786
12,026
12,186
12,247
12,418
12,571
Enterprises Employment
4,556
24,609
4,666
25,160
4,726
25,271
4,874
25,827
5,054
26,473
5,202
27,461
5,294
28,033
5,387
28,505
5,448
28,762
5,504
28,946
5,583
29,349
5,623
29,788
5,651
30,172
5,720
30,580
5,801
31,076
Exports
----------------
Industry
Value Added
(%)
-0.3
-0.8
2.1
3.1
5.1
9.1
1.6
-0.2
-0.3
1.6
1.5
0.9
1.3
1.6
Establishments
(%)
2.1
1.4
3.8
4.0
3.3
3.5
2.4
0.9
1.3
2.0
1.3
0.5
1.4
1.2
Enterprises Employment
(%)
(%)
2.4
2.2
1.3
0.4
3.1
2.2
3.7
2.5
2.9
3.7
1.8
2.1
1.8
1.7
1.1
0.9
1.0
0.6
1.4
1.4
0.7
1.5
0.5
1.3
1.2
1.4
1.4
1.6
Exports
(%)
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Key Ratios
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
IVA/Revenue
(%)
24.32
24.34
24.40
24.61
24.54
24.73
25.96
25.46
24.82
24.30
24.25
24.28
24.36
24.24
24.13
Figures are inflation-adjusted 2014 dollars.
Imports/
Demand
(%)
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Exports/
Revenue
(%)
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Revenue per
Employee
($’000)
223.07
217.43
214.24
212.19
213.98
215.15
218.97
222.97
226.21
228.98
229.79
229.54
227.83
228.85
229.77
Imports
----------------
Wages
($m)
762.4
760.5
756.1
776.8
799.2
813.4
827.9
838.1
858.1
865.8
877.4
890.6
900.6
907.5
917.7
World price
Domestic
of gold
Demand ($ per troy ounce)
N/A
444.9
N/A
604.7
N/A
696.9
N/A
872.5
N/A
972.1
N/A
1,225.5
N/A
1,569.6
N/A
1,668.5
N/A
1,410.8
N/A
1,271.8
N/A
1,282.8
N/A
1,300.3
N/A
1,320.3
N/A
1,330.3
N/A
1,395.9
Imports
(%)
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Wages
(%)
-0.2
-0.6
2.7
2.9
1.8
1.8
1.2
2.4
0.9
1.3
1.5
1.1
0.8
1.1
Domestic
Demand
(%)
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
World price
of gold
(%)
35.9
15.2
25.2
11.4
26.1
28.1
6.3
-15.4
-9.9
0.9
1.4
1.5
0.8
4.9
Average Wage
($)
30,980.54
30,226.55
29,919.67
30,077.05
30,189.25
29,620.19
29,533.05
29,401.86
29,834.50
29,910.87
29,895.40
29,897.95
29,848.87
29,676.26
29,530.83
Share of the
Economy
(%)
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
Wages/Revenue
(%)
13.89
13.90
13.97
14.17
14.11
13.77
13.49
13.19
13.19
13.06
13.01
13.03
13.10
12.97
12.85
Employees
per Est.
2.61
2.62
2.59
2.55
2.51
2.52
2.49
2.47
2.47
2.46
2.44
2.44
2.46
2.46
2.47
SOURCE: WWW.IBISWORLD.COM
Pawn Shops in the USNovember 2014 30
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Jargon & Glossary
Industry Jargon
IBISWorld Glossary
BIG-BOX RETAILERA retail store that is differentiated
by its sheer size and large range of products, including
electronics, households goods and other consumer
products.
COLLATERALAn object that is pledged as security for
repayment of a loan.
BARRIERS TO ENTRYHigh barriers to entry mean that
new companies struggle to enter an industry, while low
barriers mean it is easy for new companies to enter an
industry.
INDUSTRY REVENUEThe total sales of industry goods
and services (exclusive of excise and sales tax); subsidies
on production; all other operating income from outside
the firm (such as commission income, repair and service
income, and rent, leasing and hiring income); and
capital work done by rental or lease. Receipts from
interest royalties, dividends and the sale of fixed
tangible assets are excluded.
CAPITAL INTENSITYCompares the amount of money
spent on capital (plant, machinery and equipment) with
that spent on labor. IBISWorld uses the ratio of
depreciation to wages as a proxy for capital intensity.
High capital intensity is more than $0.333 of capital to
$1 of labor; medium is $0.125 to $0.333 of capital to $1
of labor; low is less than $0.125 of capital for every $1 of
labor.
CONSTANT PRICESThe dollar figures in the Key
Statistics table, including forecasts, are adjusted for
inflation using the current year (i.e. year published) as
the base year. This removes the impact of changes in
the purchasing power of the dollar, leaving only the
“real” growth or decline in industry metrics. The inflation
adjustments in IBISWorld’s reports are made using the
US Bureau of Economic Analysis’ implicit GDP price
deflator.
PAWN LOANA loan that is secured by collateral held by
the pawn broker (or pawn shop).
INDUSTRY VALUE ADDED (IVA)The market value of
goods and services produced by the industry minus the
cost of goods and services used in production. IVA is
also described as the industry’s contribution to GDP, or
profit plus wages and depreciation.
INTERNATIONAL TRADEThe level of international
trade is determined by ratios of exports to revenue and
imports to domestic demand. For exports/revenue: low is
less than 5%, medium is 5% to 20%, and high is more
than 20%. Imports/domestic demand: low is less than
5%, medium is 5% to 35%, and high is more than
35%.
EMPLOYMENTThe number of permanent, part-time,
temporary and seasonal employees, working proprietors,
partners, managers and executives within the industry.
LIFE CYCLEAll industries go through periods of growth,
maturity and decline. IBISWorld determines an
industry’s life cycle by considering its growth rate
(measured by IVA) compared with GDP; the growth rate
of the number of establishments; the amount of change
the industry’s products are undergoing; the rate of
technological change; and the level of customer
acceptance of industry products and services.
ENTERPRISEA division that is separately managed and
keeps management accounts. Each enterprise consists
of one or more establishments that are under common
ownership or control.
NONEMPLOYING ESTABLISHMENTBusinesses with
no paid employment or payroll, also known as
nonemployers. These are mostly set up by self-employed
individuals.
ESTABLISHMENTThe smallest type of accounting unit
within an enterprise, an establishment is a single
physical location where business is conducted or where
services or industrial operations are performed. Multiple
establishments under common control make up an
enterprise.
PROFITIBISWorld uses earnings before interest and tax
(EBIT) as an indicator of a company’s profitability. It is
calculated as revenue minus expenses, excluding
interest and tax.
DOMESTIC DEMANDSpending on industry goods and
services within the United States, regardless of their
country of origin. It is derived by adding imports to
industry revenue, and then subtracting exports.
EXPORTSTotal value of industry goods and services sold
by US companies to customers abroad.
IMPORTSTotal value of industry goods and services
brought in from foreign countries to be sold in the
United States.
INDUSTRY CONCENTRATIONAn indicator of the
dominance of the top four players in an industry.
Concentration is considered high if the top players
account for more than 70% of industry revenue.
Medium is 40% to 70% of industry revenue. Low is less
than 40%.
VOLATILITYThe level of volatility is determined by
averaging the absolute change in revenue in each of the
past five years. Volatility levels: very high is more than
±20%; high volatility is ±10% to ±20%; moderate
volatility is ±3% to ±10%; and low volatility is less than
±3%.
WAGESThe gross total wages and salaries of all
employees in the industry. The cost of benefits is also
included in this figure.
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