A new day for pawn shops

  • Article by: HERÓN MÁRQUEZ ESTRADA , Star Tribune
  • Updated: December 10, 2011 - 9:33 PM

Fueled by the popularity of reality TV shows, pawnshops are becoming popular destinations for holiday shoppers.

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Brad Rixmann, president of the Minnesota Pawn Association, stood in the wide, well-lighted aisles at the Pawn America store in Burnsville.

Photo: Jerry Holt, Star Tribune

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When John McClellan needed Christmas gifts for his wife, his kids, his mom and his brother, he knew just where to look: his neighborhood pawnshop.

Don't laugh. Fueled by an improving image and popular cable TV shows such as "Pawn Stars" and "Hardcore Pawn," pawnshops are becoming increasingly popular destinations for thrifty holiday shoppers.

Last year, Burnsville-based Pawn America, which runs 22 stores in four states, had its best holiday season ever. In the month before Christmas in 2010, Pawn America reported almost 70,000 transactions at its 22 stores, almost double the number it was doing as recently as 2006.

This year, the company says its Black Friday sales were up 35 percent over 2010. And during the past five years, retail sales at Pawn America have increased an average of 40 percent in the month before Christmas. The company reported revenue of $57 million last year.

McClellan last year purchased video games, bicycles, movies and jewelry as gifts at Pawn America stores in Bloomington and Burnsville.

"The kids were just as happy as if I had purchased everything new," McClellan said. "I got stuff on layaway there now."

The National Pawnbrokers Association estimates that there are about 13,000 pawnshops around the country, a $6.1 billion industry that continues to grow despite the economic downturn, as more people look to save money -- or get some quick cash.

"Business has been very strong and that will continue ... through the holidays," said Emmett Murphy, a spokesman for the group.

Murphy said about 85 percent of the shops are independent, so much of the evidence of their growing retail popularity, especially during the holidays, is strictly anecdotal.

"Our sales do spike in December," said Brad Rixmann, owner of the Pawn America chain. "It's our best month.

"We follow the same retail trends as others do," said Rixmann, who also is president of the Minnesota Pawn Association. "We're no different than any other retailer. I want my store to be at 50th and France in Edina. I want it to be on Grand Avenue in St. Paul."

Image overhaul

That might not be as far-fetched as it might have been five or 10 years ago.

Local and national groups say larger pawnshop chains, still home to high interest rates and same-day emergency loans, are more and more resembling Best Buy, Home Depot or other major merchants.

"We are trying to make it more inviting," said Heidi Brownlee, who earlier this year purchased Midwest Pawn in Anoka. "Brad Rixmann has done an awesome job for the pawn industry. He is making it seem like more of a retailer."

That is evident at the Pawn America locations in the Midwest, including stores in Wisconsin and North Dakota.

The Burnsville store, for example, sports wide aisles, well-lighted displays, and a warehouse stocked with TVs, guitars, clothing, movies, electronics and video games.

Most of the items are unclaimed merchandise that people have pawned. But Rixmann also buys new items, such as last year's TV models, to sell.

All of the items are spread across almost 20,000 square feet, a once-unheard-of size for pawnshops, which traditionally were seen as cramped, crowded and poorly lighted places in undesirable areas.

"Years ago, they were not the most comfortable places to walk into," said Burnsville Police Chief Bob Hawkins, who monitors Pawn America and other shops. "They have actually changed quite a bit. You walk into Pawn America today and you feel like you're walking into a big-box retailer."

That is not to say that the risks of dealing with pawnshops, or buying from them, have completely gone away.

Just last month, for example, three men in Eagan and Burnsville were arrested and charged with pawning thousands of dollars in stolen items, including Xbox games, guitars and 69 DVDs.

McClellan, the shopper, said he understands there might be more risk in purchasing an item at a pawnshop, but he counts on the store, police and regulators to minimize his exposure.

"If there are any stolen items," he said, "I believe those [issues] are resolved before the merchandise hits my hand."

The industry is highly regulated in Minnesota, and most large cities require shops such as Pawn America to record and document each item that is bought, sold or held.

This information is then constantly checked against police computer databases of items reported stolen.

If a stolen item makes it through the safety net and is purchased, it will be recovered by police and the money refunded, Rixmann said.

"Every day of the year someone is checking me out," Rixmann said. "I don't mind. I've got nothing to hide."

Heron Marquez • 952-746-3281

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