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“I don’t want to look just at other pawnshops for competition,” said Rixmann. “I want to compare ourselves to convenience stores and big boxes and ask how we can plug ourselves into that company.”
One example of that shift is the deliberate avoidance of the word “pawn” in the company’s two newest stores in Hopkins and St. Paul, called PA Exchange. The two stores do not have a pawn counter in them, although pawns are done at an adjoining store with a separate entrance.
There are more changes to come. Rixmann plans to add a trading option by the end of the year whereby a customer could bring in a Coach purse and exchange it for a diamond ring, for example.
These kinds of hybrid stores, minus the pawn loans, allow Rixmann and other owners to open stores where a traditional pawnshop may not be allowed because of zoning regulations.
Stigma remains for some
Despite the makeovers, it isn’t enough for many shoppers. Only 7.4 percent of U.S. households have used a pawn store, according to the Federal Deposit Insurance Corporation’s 2012 survey.
Jill Warner of Minnetonka was looking around at the PA Exchange store in Hopkins only because she was waiting while her husband tried to sell something. “I don’t like coming to these stores,” she said. “I am not sure I’m getting a fair deal.”
In fact, some pawnshop owners are considering avoiding the retail stigma by concentrating on the more profitable piece of the business — the pawn (loan) in which customers are charged interest and fees of 7 to 22 percent per month on a collateral loan.
Nearly 80 percent of pawn brokers reported that loans are the most common transaction, not retail sales or cash for gold, according to the National Pawnbrokers Association.
Michael Strauss, owner of Uptown Pawn in Minneapolis, wants to limit or eliminate the retail part of his store and expand the lending. He’s considering cutting overhead by holding a public auction once a week and using his retail space to create a more welcoming, discreet loan shop similar to a bank lobby.
“I want to create a bank alternative without bars on the windows for people who need a line of credit,” he said.
Whether the consumer is looking for retail or a loan, the pawn industry continues to find ways to attract customers who wouldn’t normally go into a pawnshop.
Reality shows such as “Pawn Stars” and “Storage Wars” have removed some of the stigma and encouraged people to include pawnshops when looking for collectibles and oddities. Luxury pawnshops in Las Vegas and Beverly Hills now specialize in niches such as luxury handbags, art and wine collections, said Murphy.
While Rixmann doesn’t see that kind of specialization in the Twin Cities, he does look forward to having stores in places not normally associated with pawnshops. “I’d like to have stores at 50th and France in Edina and Grand Avenue in St. Paul,” he said.
John Ewoldt • 612-673-7633