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Archive for Sunday, January 24, 1999

DESPITE BOOMING ECONOMY, LAWRENCE PAWN SHOP GOES BUST

January 24, 1999

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Lawrence is losing one of its three pawn shops, and the owner says it's because the town's economy is good.

A booming Lawrence economy is good for everyone, right? Well, not necessarily.

Good times for everybody else can mean tough times for pawn shops, and Lawrence is losing one soon. 23rd Street Pawn plans to shut down at the end of next month after eight years in town.

People just aren't hocking their television sets, stereos, guns and wedding rings from failed marriages as much as they used to, said co-owner Archie Coleman.

"The economy has improved quite a bit, and that's basically not good for pawn shops, at least in my opinion," he said.

Coleman, a Eudora resident, and his partner, Murl Hicks of Overland Park, decided in December to close the store at 1420 W. 23rd so they could concentrate on the Grandview, Mo., shop they've owned since 1995.

"None of the people were coming in to pawn," said the shop's manager of six years, Tony Duran.

But the owners of Lawrence's two remaining pawn shops say their businesses are doing well and that they haven't noticed any decline in customers despite the area's thriving economy.

Nationwide, the number of licensed pawn shops has doubled since the mid-1980s to nearly 14,000, according to a recent Knight Ridder/Tribune Business News story.

"Pawns are fine," said Jack Jacobs, owner of Lawrence Pawn at 23rd and Haskell.

Jacobs, who opened Lawrence's oldest pawn shop in 1982 on New Hampshire Street, said his business hasn't suffered with the city's growth and prosperity.

"That's not the case at our store," he said.

Scott Jackson, manager at Jayhawk Pawn and Jewelry, 1804 W. Sixth, said his store is setting business records right now.

"They have never been higher," he said. "In the last four years, our company has doubled in size and added two stores."

Jackson said he thought 23rd Street Pawn's problem was its location and store size.

"It had limited access, and the site was small," he said. "They don't have places to store a large amount of merchandise. The business had been sold and bought back, sold and bought back. He did not a have a large loan file, and he didn't have a large inventory."

Travel through low-income areas in larger cities, and you're likely to see a pawn shop on nearly every corner. But Jackson dismisses notions that the number of pawn shops in a community is an indicator of a bad economy.

"I'll explain why," he said. "A pawn shop has got three basic functions. It loans, it acts as a retail outlet and it acts as a used merchandise outlet. As the economy moves, you can modify the levels of those three basic functions to make sure you turn a profit."

Jayhawk Pawn and Jewelry has five stores, one in Lawrence, two in Topeka, one in Leavenworth and one in Hutchinson. And it's opening shops in Overland Park, Olathe, Salina and Lincoln, Neb. Jayhawk Pawn has been in Lawrence for about 10 years.

Jackson said his shop has seen a bit of an increase in business since 23rd Street Pawn put up a sign on its window announcing it was closing.

"When people need loans, they've got to go where the money is," Jackson said.

Pawn shops are attractive to people who need immediate cash and want minimal paperwork, Jackson said.

The average loan amount is $50, and about 80 percent of Jayhawk Pawn's customers pay the loan back to redeem their belongings, Jackson said. Lawrence's two payday loan establishments, a relatively new entrant that gives customers cash back on a post-dated personal check, haven't affected pawn business, he said.

Meanwhile, 23rd Street Pawn has contacted its customers to let them know they need to come in before the end of February if they want their merchandise.

"We're trying to get it cleared out by then," Duran said.

Inventory not picked up will revert to the ownership of the store, which is what happens if a customer doesn't make an interest payment for 90 days anyway.

-- Deb Gruver's phone message number is 832-7165. Her e-mail address is dgruver@ljworld.com.

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