Founder Brad Rixmann says expansion is turning the chain into 'a junior-box retailer.'
Brad Rixmann CEO of PawnAmerica stood in the doorway of the newest store in Inver Grove Heights . where you can buy every thing for jelly beans to Coach designer bags. Black Friday is also a huge retail day for Pawn Shops. Sales jumped 33 percent on Black Friday a year ago.
Brad Rixmann's newest -- and largest -- PawnAmerica store is a 35,000-square-foot former home decorating center in Inver Grove Heights. It is his 24th PawnAmerica in a business he started in 1991 with a single location in Robbinsdale.
Sales this year are projected to reach $80 million, up from $72 million in 2011 and more than double the $37 million in revenue that PawnAmerica recorded in 2008.
Rixmann's growth has come in no small part because of the Black Friday retail sales phenomenon and the ensuing holiday shopping season.
Black Friday sales jumped 33 percent last year compared to 2010 and are expected to rise sharply again this year while exceeding the national average.
Pawnshops traditionally provide short-term loans to customers who leave personal property as collateral that can be put up for sale in 30 to 60 days if the loan is not repaid. Today, more and more pawnshop customers are exchanging merchandise directly for cash.
Rixmann talked recently about the holiday shopping trend from PawnAmerica's perspective.
QWhen did you notice that sales were increasing on Black Friday?
AAbout three or four years ago. We started to focus on Black Friday rather than random sales events, and Thanksgiving became a big weekend for us.
QWhy would consumers turn to a pawnshop for Christmas shopping?
AA lot of people are looking for more value. They want to stretch their dollars more. We've focused on how to make people more comfortable buying pre-owned merchandise. We offer an extended service plan in which we'll replace or give the customer something new rather than repair it. We're not a repair company.
QWhat is your demographic?
ATraditionally, our customers have been almost exclusively men, but we're starting to attract more women. Our goal is a 50-50 split. We were about 64 percent men and now we're at about 60-40 men to women. We've worked on jewelry, handbags. We've added clothing as a retail experiment. We want to know what sells well and at what price point.
Ten years ago, we would not take a Coach handbag because we couldn't sell it. Today it's a hot item. Women drive jewelry sales, which is the core of a pawnshop's business.
QCan you continue to grow sales as you have done on previous Black Fridays?
AAbsolutely. We have a glass ceiling that we've continuously blown through. I'd be surprised if we're not 25 percent ahead of last year. We've got more product, more retail floor space. We've spent tens of millions building stores that look like this. We're a junior-box retailer.
QDo you have expansion plans?
A We're going to open stores next year in Green Bay, Milwaukee, St. Paul, and we are tripling the size of our Hopkins store, which was the third one we ever had.
QWhat is your mix of previously owned merchandise and new merchandise?
AIt's about 90 percent previously owned and 10 percent new. We buy factory overruns, returns and products that come with a manufacturer's warranty. We're adding impulse items like candy, soda and "dollar store" merchandise.
We buy small electronics like range finders for golf, video game equipment and car stereos. We are a version of Home Depot and Target without milk and maybe one day we'll sell milk. I'd like to put gas pumps out front. There is no end to what we can offer.
QWhat are the hot items?
AThe response to our $149 flat-screen TVs with Blu-ray player has been phenomenal. We've got the Xbox 360 and PlayStation. With those items we pull in the youth, and the kids bring in Mom and Dad.
David Phelps • 612-673-7269