Downturn chases feet through pawn shop doors
September 16, 2009
By Florence de Vries
Pawn shops countrywide are getting more feet through their doors as people rush in to make extra money. But second-hand retailers such as Cash Converters are the ones really cashing in because of their guarantees.
Although making extra cash seems to be the primary reason for the upswing at second-hand goods stores, some pawn shop owners have posited a myriad other reasons for the increase in pre-owned goods for cash in the past year.
Attie Mathee, the owner of Bluff Pawn Shop in Durban, said many of his customers had come to sell their goods because they were leaving the country. "They are bringing their wardrobes, dining room tables and exercise bikes for me to sell," he said.
But sales of these goods had not significantly increased, Mathee said.
The 25-year-old store has seen many good years but although people are selling their goods more readily, it seems not many are keen to buy as reduced sales at this store have shown in the past year.
For this very reason, Michael Schuin, the owner of Crown Pawn shop in Pretoria, is selling his goods for much less than they are worth.
"I have seen an influx of customers coming in to sell their furniture because they have to move to a smaller place in tough financial times," Schuin said.
But because sales of items had not significantly picked up in the past year, Schuin had to sell at lower prices to get the stock off his floor.
"My turnover has decreased significantly in the past year."
Schuin said the upside to selling second-hand goods was that his turnover had decreased by between 30 percent and 40 percent compared with a 60 percent to 70 percent decline if he were selling new goods.
In Cape Town, Cash Providers and Pawn Shop is selling digital cameras and furniture at record prices. Store assistant Mary Husselman said there had been a significant upswing in sales in the past year.
But while the reasons for sales at pawn shops are more nuanced, established businesses offering guarantees on their goods are cashing in on the tough times.
Richard Mukheibir, the managing director of second-hand goods chain Cash Converters, said there had been a significant increase in retail sales in the past year, with turnover rising more than 20 percent from the previous year.
"The reason for this is the significant upturn in purchases through people getting rid of unwanted equipment to make extra money," Mukheibir said.
The increasing stock of televisions, audio systems and sporting goods in the group's 40 stores countrywide had resulted in increased sales since the group sold goods at "relative to new prices".
"Even though people are having a tough time, they still have a desire for cellular phones and electronic equipment, which we sell with guarantees and people are happy to do business with us."
He explained that trends in the second-hand goods market in South Africa were almost a carbon copy of those in Australia and the UK, where the group had 150 and 140 branches, respectively, and these had had a similar upswing in the past year.
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