“I’m a Store, Not a Shop”

Mark CampanaleNPA News, Pawn Articles

by Steve Fowler

Reprinted from the Summer 1998 issue of National Pawnbroker

I’m not telling you anything you do not already know when I make the statement, “Pawnbroking in America has an image problem.” Many of the negatives we in the industry suffer are misplaced stereotypes, bred and fed by the entertainment industry and the news media. However, some of the negatives are based on a measure of truth. We are limited in our ability to engage the media myths, but do have considerable power in overcoming the negatives based on our own actions.

The level of power or control is up to us as individual pawnbrokers. We possess the ability to destroy a number of negatives that bring harm to our image: individually and collectively as an industry. If we possess the attitude and desire to improve our stores, based on sound business principles and with a good business plan, we can and will eventually overcome those terrible negatives.

Have you developed a philosophy about the image and appearance of our business? Are tools, jewelry, or guns your most important inventory item? Do you engage in continuing education to better yourself and your pawnshop? Follow me as I consider these and other areas of pawnbroking.

  1. I never refer to my store by the single word “shop”. I feel it lowers the image of a retail business (exceptions includes stores like dress shop and coffee shop). How does “jewelry shop” sound? Before you pounce on me, I do use the word pawnshop. I just don’t say, “Hey, drop in to my SHOP, if you’re in the neighborhood.” I’d rather say, “My STORE is centrally located, and if you’re in the area, please stop in.”
  2. I’m a pawnbroker engaged in pawnbroking in a pawnshop. I’m not a hockbroker engaged in hockbroking in a hockshop. There are a number of derogatory synonyms for pawn and pawnbroking and I choose not to let them become a part of my vocabulary. Nor do I permit my employees to use such terms.
  3. I am sure most of you would agree that many pawnbrokers should work harder to clean up their stores. We live in a very competitive era and a junk-filled pawnshop is not conducive to decent profits and the presentation of a professional image. I’ve visited hundreds of pawnshops throughout North America and am disappointed to say that more than a few of them do not bring to mind terms like professional, clean, tidy, comfortable, or appealing. Evaluate your product mix, market, and methods of display.
  4. Too many pawnbrokers don’t know how (or just will not take the time) to clean their stores and their merchandise. Dust abounds in the great majority of the pawnshops I have visited. If you turn merchandise, thereby turning dollars, dust won’t have time to collect.
  5. Pawnbrokers are notorious for paying very little for used merchandise, then pricing those goods with new retail prices. This is neither helpful in building your business nor a healthy competitive marketing strategy.
  6. Many pawnbrokers feel the need, or have a desire, to lower themselves to a level equal to, or below, the appearance level of their customers. Keep this in mind. The book “Dress for Success” was a bestseller. “Dress for Mediocrity” was a flop.
  7. Some pawnbrokers condone foul language in their stores and too often participate in this behavior themselves in front of children and other customers. You shouldn’t permit this behavior in your business.
  8. Many pawnbrokers fail to bathe and groom themselves properly and regularly. How about a shave? Haircut? Shampoo anyone? My mother has always said soap is “cheap”, and taking time to tidy up doesn’t cost money.
  9. Some pawnbrokers fail to keep regular business hours. Just plain dumb.
  10. Many pawnbrokers fail to understand the nature of the fiduciary relationship they have with their customers. Therefore, they fail to adequately insure and protect the property of others. Fiduciary is synonymous with confidence, faith, and trust. Do your actions reflect an appropriate level of responsibility in your role as one who must honor the faith, trust, and confidence your customers have reposed in you?
  11. I’ve been in pawnshops without alarm systems. I know of one that operated (until it went out of business) without a safe. They used a standard filing cabinet with no lock. I know of another that has operated for 20 years using only a bankers (cardboard) box to store pledged jewelry. Many fail to use good screening procedures when hiring employees. Many are too loose with the access they permit to their back room. Friends, employees, boyfriends, children, customers, etc. commonly travel in and out of pawnshop back rooms across this nation. Give your customers a good reason to trust you with their property.
  12. Lawyers, doctors, accountants, jewelers, hotel managers, firemen, chefs, airline pilots, policemen, and others take the opportunity to engage in ongoing education. To remain competitive and competent in this day and age, we must make every opportunity to engage in improving our knowledge and skills. Do you attend your state, regional, and national pawnbrokers association meetings and seminars? If not, the NPA National Convention [Pawn Expo] is a great place to start.
  13. A few pawnbrokers fail to adhere to ethical business practices and don’t operate their stores in compliance with applicable laws and ordinances. This creates a multitude of problems for the “Good Guy” pawnbrokers. Operate your store with common sense, good ethics, high moral standards, community spirit, and within the law.
  14. Some pawnbrokers are all too eager to default loans and seize property. The short-sighted nature of those pawnbrokers results in poor public relations when a greedy action results in the loss of both the pawn customer and a redeemable transaction. I’ve seen countless situations where a loan was defaulted at the stroke of midnight, only to sit on the shelves for years. Not smart.
  15. A few (fortunately very few, but still too many) pawnbrokers seize pledged property prior to the date noted in their agreement with the pawning customer. Enact procedures to avoid the accidental involuntary forfeiture of pledged goods prior to the expiration of the customer’s contract with you. Mistakes can happen; however, this is a big no-no. If it happens and it’s not a mistake, you should forfeit your pawnbroker’s license.
  16. All prudent business owners insure. Do you? Do you have liability insurance? Do you carry workman’s compensation insurance? Do you insure the property of others? Remember your fiduciary responsibility to your customers.
  17. Some pawnbrokers still insist on using outdated cigar box accounting procedures. You have more in the box at the end of the day than you started with? Yes? Then you must have had a profitable day. Right? WRONG! Can you track your sales? Do you know what percentage of your profit is from interest income on loans? Get smart. Adopt modern accounting procedures and throw away that box.
  18. More than 9 out of 10 pawnbrokers answer the following question incorrectly when I ask it: “What is your most important inventory item?” The answers I get are usually jewelry, electronics, or guns. The correct answer is CASH! The best way to make a profit in this industry is to turn inventory. This relates to number 12 above. If that item is sitting on the shelves out front, it’s not making you any money. So what if the guy redeems it and never comes back. You can now turn that money over and over and over and over. TURN YOUR INVENTORY! TURN YOUR CASH! I often think of the items in back as being connected to little meters. As long as they’re in back, the meter is usually ticking and profits are being created. When they are sitting out front, the meter is stopped cold. You get one tick, and that’s when it sells.
  19. Many pawnbrokers really don’t know what business they’re in. If they think they are primarily in the retail business, they’re dead wrong. A pawnbroker is in the lending business first. Retail is only a byproduct of pawnbroking. All other profit centers are, and should be, secondary.
  20. Membership. There are too many freeloaders in this industry. They need to be paying their fair share. They need to become members of the state associations and the NPA. The NPA is seeking members who are good, competent, responsible, and honest pawnbrokers.

I’ve placed myself in a very public position in my community. I’m a politician. Unfortunately, pawnbrokers like those described above, make my life very difficult in terms of public opinion and the opportunity for votes and support. Negative stereotypes, perpetuated by some of our peers in this industry, affect us all. And yes, at times I am embarrassed about being a pawnbroker. When? For the most part, it is when I enter one of the seedy establishments described herein or when a creep with a pawn license makes the front page or the evening news operating outside the law. This offends me and it should offend you.

I believe the biggest problem is that most of those offenders I’ve described see absolutely nothing wrong with the way they operate their businesses. What a shame. Pawnbrokers must conform to this professional competitive era we live in – or fail. Are you a leader in this evolving industry? YOU CAN BE!

Business consultant Steve Fowler is a former multistore pawn store owner and previous member of NPA’s Board of Directors. His pawn industry experience includes senior management responsibilities with Pawnbroker.com and Mister Money Holdings. For more information, visit SteveFowler.com.