Pawn shops are a funny place. I’m guessing a lot of the more genteel Iowans have never been in one. Its kind of an economic ‘dirty book store’. Aside from the palm tree growing out of the top of this one, it could be anyone of the ones dotting the Iowa landscape. My guess is very few of the items that end up there were ever dropped off with the intention of going back for them. They end up being thrift stores for tools, jewelry, electronics and guns. I remember reading one time that when pawn shops and checks into cash (payday loan) places spring up, its an indicator that a neighborhood is in full blown decline. In Ames another indicator was the explosion of clothing consignment shops.

What I don’t understand about pawn shops is their business model. I get the part about they have to ‘buy wholesale’ and ‘sell retail’. They have to pay employees, the lease and the light bill. so their goal is to pay X and sell for 2X. But that’s where it gets fuzzy for me. I don’t know about jewelry and electronics, but I do know about tools and guns. I saw a nice little 20 piece socket set yesterday for $16 bucks. You could buy it new at Walmart or Lowes for about that or a few bucks more. Why would you pay the same amount for used?

Another area is guns. You can buy a brand spanking new gun (and a good one at that) for $136 dollars at a gun show. A Taurus Spectrum .380. You can buy a new Hi-Point 9mm for $139. So imagine my surprise when I saw a used Ruger LCP for $200 at the pawn shop on Lincoln Way in Ames. New price is $219 (LCP II new price is $299 or on sale for $249). Are you wanting to sell guns or store them? They have a used Taurus PT111 for $189 I believe, a new G2C (its replacement) only goes for $215. So in both cases only $20 bucks more would buy you new of the same item, and you wouldn’t have to worry about what some nimrod previous owner did to the gun on the used market!

Assuming they do the same thing for electronics and jewelry, I don’t see how they keep the doors open. Anyone who knows market value on the items would never buy them! There must be a lot of unaware consumers. You know in the example above they didn’t give a penny more than $90 for the LCP, they could actually sell it for $130, instead of storing it for $199. Just don’t get it. “Store of wealth” (the retained value of an item), its a strange business. They seem to stay in business. You just think they could make a lot more money if they were actually interested in selling stuff instead of just ripping people off.