With the supply chain closing doors, pawnshops see a window
The message has been circulating for months: Don’t put off holiday gift-buying until the last minute this year. Shipping delays mean some store shelves have less to offer than in years past. And a global shortage of computer chips might mean certain items are unavailable altogether.
That may be grim news for some, but not everybody sees it as a bad thing.
Pawnbrokers are hoping the supply chain crisis might prompt shoppers to take a second look at buying second hand.
“I’m always surprised that we’re not the first stop,” said Ed Pierce, owner of the Monster Pawn in Bloomington and Peoria.
Pierce describes himself as genuinely shocked that people pay full price for things like musical instruments and camera equipment without checking a pawnshop first.
But he said when it comes to buying used merchandise, people tend to divide into two camps.
“Some people don’t ever think that they want to buy used but some people, that’s all they want to do,” Pierce said.
But as supply chain issues continue to mount, the industry sees an opportunity to win over some new business.
Kelly Swisher is the president of the Illinois Pawnbrokers Association. He senses a bit of a shift in wider perception of pawnshops. Especially when it comes to electronics, Swisher said, people are starting to question wisdom of paying top dollar for the latest product.
“The electronics that are being produced today, they’re already antiquated when they sell them to us. Its replacement’s already being built somewhere,” Swisher said.
Some people will always chase the latest and greatest, making pawnshops both a good repository and source for relatively new electronics.
“Instead of this stuff ending up in a landfill, it makes sense to repurpose and reuse this,” Swisher said.
Buying and selling with pawnshops is good way to mitigate environmental concerns, Swisher said. The world is already full of stuff. So instead of creating demand for more, just buy the stuff that already exists.
Swisher said secondhand consumption has social benefits as well.
“There’s a huge push to start using recycled gold,” he said. Mining for precious metals is hard on the earth and often involves exploitative labor practices. Broken or unwanted jewelry that’s sold to pawnshops is in turn sold to a processor and melted down for reuse, easing the demand for new gold.
Buying goods and materials is a big part of what pawnbrokers do. Some purchases may be straight transactions – like broken gold – but most happen within the context of loan-giving.
A person who needs a small, quick loan – say $100 – brings a laptop to a pawnbroker. The broker takes the item in exchange for the money, giving the person an agreed upon amount of time to essentially buy the laptop back for $100 plus a service fee.
If the person decides that they don’t want (or can’t afford) to get the laptop back within the appointed timeframe, the broker keeps it for resale. The person keeps the $100, and the transaction is complete.
Pierce, of Monster Pawn, said pawnshops essentially function as banks that specialize in small loans. And given that people tend to turn pawnbrokers for quick cash, he was surprised there wasn’t an uptick in transactions during the pandemic.
“If you would’ve asked me at the beginning of that, I would’ve thought we’d be loaning money like crazy,” Pierce said. But he thinks government stimulus checks may have been getting people through.
Nearly two years in, the pandemic is still here. Government stimulus is trailing off, but the economic effects of COVID-19 are not. So, Peirce thinks he may see increased interest in pawn transactions as the holidays approach.
“I think a week before Christmas … the telephone may be ringing off the hook,” he said.
Swisher said at his shop in Arlington Heights, the phone’s been ringing off the hook for weeks. Callers are usually hunting down one item in particular.
“Everybody is looking for gaming consoles right now,” he said.
Thanks to the computer chip shortage, gaming consoles are in extremely short supply. Swisher said he hasn’t been able to keep one on the shelves for more than 24 hours. That’s good news for someone that has a gaming console to sell, but not so good for someone looking to buy.
But pawnbrokers stand to gain on both sides of the equation. And pawnshops may be the rare industry that stands to benefit from the supply chain mess.
Pierce believes that fewer options may win the industry more converts.
“If the supply chain (crisis) stays and continues with us, I think we’re going to be more and more the option,” he said.