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Trend Report | 2021 June
3888.407.6287 bravostoresystems.com 888.407.6287 bravostoresystems.com
Inside the Report 04 Hello from Tally Mack, CEO
06 The Impact of the Pawn Industry
08 How Pawn Differs from Other Financial Institutions
09 The Pawn Community
10 Pawn Industry & Demography
12 Confiscation & Redemption Percentages
13 Impact of COVID-19
14 Mobile Trends
16 Top 6 Industry Trends
Methodology & Sources
Information and analysis presented in this report is produced using proprietary data from Bravo Store Systems,
unless otherwise cited. To protect the anonymity of Bravo customers, data is presented in the form of averages
across all Bravo customer locations.
Information presented represents data from January 1, 2020 to June 1, 2021, unless otherwise noted.
T R E N D S 2021 JUNE
54
Message from the CEO from Tally Mack
There were challenging moments during the Covid-19 pandemic when it seemed that everything had been turned upside down, leaving everyone with questions about when, if ever, the pawnbroking world would return to previous conditions.
Like most businesses, Bravo weathered the pandemic byleaning into our core purpose and focusing on serving our customers.As we navigated through unprecedented business conditions together with the roughly 1,300+ pawnshops that are supported through our platform, it reminded us of something that we've always known: Pawn doesn't quit.
Tally Mack, Chief Executive
Hello
As the industry leader in developing first-to-market software solutions and services to niche industries, we believe we are in a unique position to advocate for underserved and underrepresented markets through providing this critical insight. Some of the findings are unsurprising. For example, changes that were already afoot—like the shift towards mobile—were accelerated over the past year.
In our first PawnTech Report, we hope to spark an insightful dialogue about the critical nature of the non-recourse, secured, safety-net credit supplied by pawnshops millions of times each year. This data may also help clear up confusion about pawnshops as compared with other alternative lenders and help the public understand that no other creditor offers the same type of transaction provided by pawnbrokers. "
The purpose of this report is to share key industry data with the people who help shape our landscape (such as stakeholders, media and lawmakers) and to provide business operators with PawnTech trends that can help inform decisions about technology investments.
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Trend Report | 2021 June
We know that in order to recover, it is necessary to take a deep dive into what the latest industry data is telling us.
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Trend Report | 2021 June
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The Impact of the Pawn IndustryPawnbroking is the oldest source of credit. A pawn is a collateral loan. Pawnbrokers lend money on items of value ranging from gold and diamond jewelry to musical instruments, televisions, electronics, tools and equipment, firearms and more.
The amount of the loan is based on the value of the collateral. Pawn loans are typically small-dollar safety net loans. The interest charged, as well as the term, can vary from one state to the next. During the pawn transaction, customers receive a written explanation, called a pawn ticket, that explains the details, including the interest amount, how long the customer has to pay back the loan and more.
No other creditor offers the same type of transaction as do pawnbrokers.
A study by Vanderbilt University noted that Consumers seem to avoid making big financial mistakes when using pawnshops. Something about the
use of personal items (and particularly sentimental personal items) as collateral
may distinguish these loans from credit cards, payday loans, and the like in
terms of borrowers’ repayment and default behavior.
The 16% of Americans who are underbanked have some sort of bank account, but they also rely on alternative financial services.
According to the latest findings of the FDIC, 22% of American adults (63 million) are either
unbanked or underbanked.
22%U.S. adults unbanked
underbanked
The almost 6% of Americans who are unbanked have no bank account whatsoever and must rely on alternative financial products and services—such as payday loans, check cashing services, money orders and pawn shop loans—to take care of their finances.
5.4%U.S. adults
unbanked with no bank
whatsoever
16%
U.S. adults underbanked
"
"
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Trend Report | 2021 June
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What are Non-Recourse Loans The distinction between recourse loans
and non-recourse loans comes into play if you cannot repay the money you’ve borrowed. According to the IRS,“recourse debt holds the borrower personally liable and allows lenders to collect what is owed for the debt even after they’ve taken collateral (home, credit cards). Recourse lenders have the right to garnish your wages, levy your accounts and impact your credit score. By contrast, a non-recourse debt (loan) does not allow the lender to pursue anything other than the collateral.”
Therefore, the primary difference oan favors the lender, while a non-recourse loan benefits the borrower. Payday loans are recourse loans, just like title loans and paycheck advances.
That means that if a borrower can’t repay a payday loan, it can hurt their credit, overdraw their bank account, incite calls from debt collectors and even cause wages to be garnished.
Additionally, payday lenders frequently allow borrowers to roll over their debt. This gives the customer more time to pay back the loan, but it also adds interest and fees, which increases their debt. This can happen over and over again, creating a cycle of debt that is difficult to break.
73k
approximate number of pawnshops in the U.S.10k
The Pawn CommunitySize of the Pawn Industry
How Pawn Differs from Other Financial InstitutionsPawnbrokers serve customers at every income level, but some rely on pawn loans because they do not have access to traditional banking products.
Most customers, as reflected on page 12, redeem their loans and simply pick up the item from the
pawnshop once they've repaid what they owe. Pawn loans are non-recourse, meaning if the customer does not
redeem their loan, it has no impact on their credit score. Rather, the item is forfeited to the pawnbroker, who then sells it in their shop— usually at a deeply discounted price
when compared to retail value.
*Multiplied approximate number of pawnshops in the U.S. and average number of employees across all Bravo customer locations.
estimated number of employees in the pawn industry*
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Trend Report | 2021 June
Pawn Industry & Demography
Loans by Gender
MALE
Loans by Age Group
18-24$155.61
25-34$196.64
35-44$227.60
45-54$283.98
55-64$283.72
65+$244.46
Average loan amount
Average loan amount
FEMALE$288.20 $253.02
Rings
Chains
Watches
Bracelets
Miscellaneous Jewelry
Electronics
Firearms & Knives
Tools
Musical Instruments
Necklaces Top 10 Loan Categories
Loans by Loan Type
New Loan
Average loan amount
$187.01
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The Impact of COVID Average Confiscation Percentage
Average Redemption Percentage
It's a common misconception that pawn shops acquire a high volume of stolen items or items used in crimes. In fact, the number of items confiscated from pawnshops is incredibly low, only six items out of every 10,000! Pawn is a heavily regulated industry, at both state and federal levels, and pawnshops are required to comply with all
local and federal law enforcement regulations and laws. Pawnshops
report transactions often to their local law
enforcement agencies and are highly
collaborative when local authorities require
assistance tracing a suspicious item or piece
of evidence.
Confiscation percentage was calculated using
transaction and confiscation numbers from January 1, 2018 to June 1, 2021,
across all Bravo customer locations.
Another common misconception is that pawnshop users bring their items to the store to dispose of the item and have no intention of paying off their loan or retrieving the item.
In actuality, individuals rely on pawnshops as a trusted financial institution that can meet an immediate financial need by issuing short-term, non-recourse loans. As the chart here shows, individuals redeem their loaned items at a very high rate, dispelling myths about the behavior of pawnshop customers.
Redemption percentage was calculated using transaction
and redemption numbers from January 1, 2018 to June 1, 2021,
across all Bravo customer locations.
Pawnshop Loan Balances Decreased
The greatest contributing factor to the overall decrease in loan balances at pawnshops nationally was the increase in customer redemptions during this time.
Bravo observed that redemption rates increased and pawnshop loan balances decreased most during the time periods where government stimulus payments were disbursed. The increase in redemption rates suggests strongly that pawnshop customers are mindful of their financial health as it relates to outstanding loans, and used the stimulus money to pay off outstanding debts and redeem items.
Mobile Usage Increased
State and municipal lockdowns during Covid-19 were the primary driving factor behind the spike in Bravo customers adopting mobile app use and the increase in mobile loan and layaway payments.
Consumers needed a way to make loan/layaway payments remotely and pawnshop operators needed a way to communicate with customers, accept payments and manage their business remotely while brick-and-mortar stores were closed.
Store Locations Increased
In contrast to the cross-industry trend of permanent brick-and-mortar closures during Covid-19, Bravo customers were opening new store locations at record pace.
Bravo customers opened nearly 300% more store locations in 2020 than the previous year, despite the pandemic.
Growth among Bravo customers is largely attributed to agility and quick adaptation of new technology, enabled through the Bravo Platform. Customers were able to implement eCommerce and mobile communication and selling channels overnight, helping to overcome stagnation and decliningrevenue growth.
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Consumer Adoption and Usage of MobilePawn App
Percentage of Loan Payments Made Through MobilePawn App
Percentage of Layaway Payments Made Through MobilePawn App
14%
12%
10%
8%
6%
4%
2%
0%January 2018 January 2019 January 2020 January 2021
14%
12%
10%
8%
6%
4%
2%
0%January 2018 January 2019 January 2020 January 2021
Bravo Customer Adoption & Usage of MobilePawn App
# of Bravo Customers Using Mobile Pawn
January 2018 January 2019 January 2020 January 2021
800
700
600
500
400
300
200
100
0
16-20k110kconsumer downloads of MobilePawn
payments made through MobilePawn each month
Consumers with MobilePawn are
200x more likely to redeem than forfeit
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Trend Report | 2021 June
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Top 6 Industry TrendsWhile some pawn industry trends are in line with customer preferences nationally, others defy expectations. The pawn industry has proven itself to be exceptionally resilient throughout the Covid-19 pandemic, thanks to quick adoption of new technology and an understanding of its critical role in providing financial options to underserved and underrepresented communities.
KEYT A K E A W A Y S
2021 JUNE
Adoption of mobile applications by pawnshop operators and pawnshop customers continues to
grow steadily, as does the volume of payments made
through MobilePawn.
Rising redemption rates reflect increased consumer reliance on
pawnshops for short-term loans and
increased intent to pay off loans and retrieve items.
Confiscation rates are incredibly low,
dispelling the myth that pawnshops acquire and transact high volumes of
items tied to crimes.
Average loan amounts remain low (under $200),
confirming that consumers rely on pawnshops as a financial institution
for short-term, non-recourse loans.
The reliance on pawnshops for short-term, non-recourse
loans is age agnostic. Pawnshop customer
demographics span all age groups, and customer
age has a direct relationship to average loan amount.
Percentage of unbanked people in the U.S. remains
steady, a strong indicator that large segments of the population are in need of the non-recourse
financial assistance offered by pawnshops.
%