Morning Sentinel
As economy continues to tank, more Mainers are heading to pawn shops
BY MECHELE COOPER
Staff Writer Kennebec Journal & Morning Sentinel 11/03/2008

WATERVILLE -- Business might be slow in many places, but the consignment industry is booming.

Worries about high prices for food and fuel have a lot of people pawning their memories for money. Many are looking to sell a ring or loan a bracelet. Others are trading in old items, which might have been thrown away or donated, just to get by.

As more and more people cope with unemployment, struggle to pay their mortgages and deal with high oil and gas bills, it seems they are turning to pawn shops to get a little extra cash.

John Weeks, who owns J.R.'s Trading &Pawn in Waterville, said he's seen a huge increase in the amount of items people are trying to pawn. He blames it on the increase costs for food, gasoline and fuel oil. He said people don't realize how much oil is tied into our economy and lifestyle.

Patrons are bringing in big-ticket items like four-wheelers, boats, snowmobiles and firearms. In the last three days, Weeks said he has seen an influx of customers who have been cleaning out their closets and getting rid of anything they don't need. One person brought in a bunch of jackets, he said.

"I have people come in every week to get money to pay for gas so they can get back and forth to work," said Weeks, president of the state pawnbrokers association. "Or they'll say they just got 100 gallons of (fuel) oil and they have to come up with the money to pay for it. I never heard of that in the past."

Weeks said he tries to give his customers at least half of what the item is worth new, but the money exchange also depends on condition of the item, how many he has in stock and what's selling.

Unfortunately, Weeks said, he has had to be cautious about what he will take in trade for cash. Much of what is brought to him is not marketable or he just has too many in his inventory.

If he has a good chance of reselling an item, Weeks said, he will take it, but the amount of money given in exchange isn't always what the customer feels it is worth.

"I apologize for the small amount I can give them, but that's the way the economy is," he said. "I get updates at a Web site designed solely for information for members of the (national pawnbrokers) association. They're seeing an increase in the items coming in for sale and they're conscious that if they can't sell it there's no sense in buying it."

Weeks said there are 45 pawnbrokers in the state. Eight belong to the association. In the past, 70 percent of the time a customer will come back to retrieve their items.

That might change.

Dave Adelman, president of the National Pawnbrokers Association, said that people are taking longer to pay back their loans and are more often taking the cash and never coming back for their goods.

"When these people come in, they need money. ... They need money to survive on," Adelman said. "It's a way of life for them. They have no where else to go to make ends meet."

Rick LaChapelle, owner of Augusta Pawn & Jewelry on Water Street, said he won't be ordering the big-ticket items like musical instruments for Christmas: People don't have the money.

His order this year will lean more to jewelry, which he said is always a good seller.

The high cost of running a business is starting to take a toll on his earnings.

"I'm feeling the costs across the board," he said. "I'm seeing a 10 to 15 percent increase in the merchandise that I purchase and I can't pass that on to the consumer. I might have been making 15 percent on an item, now it's selling on the shelf for 10 percent. I'm working with tighter margins, which means I have to sell more. My profit is going down, but expenses are going up."

While there is no conclusive data, the National Pawnbrokers Association says its 2,400 members have seen an increase in business.

LaChapelle, secretary of the Maine chapter of the Pawnbrokers Association, also owns pawn shops in Lewiston, Brunswick and Portland.

LaChapelle, who also sells new merchandise in his shops, said the pawn industry does well when the economy is good, people have extra money to spend and are always looking for a deal. But it does an even better business in times of recession.

"When the economy is down people's spending is a little tighter, so they come to us and purchase items like jewelry, which is quarter of the price they find normally," LaChapelle said. "And we always have a percentage of people looking for a quicker loan, especially right now. We have seen an increase in that business."

LaChapelle said people are pawning everything including electronics, gaming systems, televisions, boats and motorcycles. He's even had people try and sell him land. "I have false teeth down in my Lewiston shop," he said. "People have sold us everything. Even pets. We've had dogs, snakes, cats and birds."

Mechele Cooper -- 623-3811, Ext. 408

mcooper@centralmaine.com

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