ANN ARBOR, Mich., May 24, 2016 /PRNewswire/ -- To protect pawn shop consumers, technology startup PawnGuru released today a first-of-its-kind report on competition and consolidation in the fast-evolving pawn industry. According to the National Pawnbrokers Association, pawn shops serve nearly 30 million Americans, and thanks to the demise of the payday loan industry, they're growing faster than ever. The report describes the changing pawn market and explains how consumers can connect with pawn shops online, allowing them to get 260% more money for their items on average.
On April 28, 2016, two of the largest corporate pawnbrokers, Cash American and First Cash, announced their intent to merge. This merger signals the success of corporate pawn shops in the US market, and it puts enormous pressure on the 12,000 independent pawn shops that populate the United States. But how does it impact consumers?
Corporate pawn shops have created positive competitive pressure in the US. However, growing consolidation has consumers wondering whether competition will be reduced, leaving them worse off. To answer this question, PawnGuru looked at how most pawn shop regulars use shops today. Pawn consumers are disproportionately underbanked and financially vulnerable, leaving them with little negotiating power or ability. They rarely have the luxury of comparison shopping, effectively forcing them to take the first price at the first shop they visit.
However, PawnGuru's database of 40,000 items shows massive disparities between pawn shops. A previous PawnGuru study shows that the average offer for an item varies by nearly 260%, and as much as 475% in some categories, e.g., jewelry. Thus, the real challenge pawn consumers face is getting immediate access to a wide range of offers. The corporatization of pawn has had a relatively small impact on access so far.
To improve consumer welfare, both independent and corporate pawn shops need to be more transparent and accessible. That means bringing them online. The overwhelming majority of pawn shops regulars have smart phones. They rely on the mobile internet to get vital information every day. This is the standard in nearly every other retail industry– why should pawn be any different?
Consumers should submit their items online for free to multiple local pawn shops using PawnGuru's website. With over 1,500 shops signed up, PawnGuru is active across the United States.
To learn more about protecting consumer welfare in pawn, payday and banking, check out the report at: Pawn shops are anxious, but consumers have the most to fear
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