Cash Converters are nation's fastest growing retailer

I thought this would be relevant for this forum as it is related to the economy but mods can move it if they like. I'm not surprised that a lot of people are selling their belongings there but it's a bit scary that it is having the most growth of any store.

Pawnbrokers thriving as poorest hurt in slowdown

On a sidewalk in Sydney's Bankstown, where unemployment is more than double the national average, Dave Cox pulls the starter cord of an edge trimmer to prove it works as he tries to sell it to pawnbroker Cash Converters.

“The economy is pretty crap right now,” 38-year-old truck driver Cox, who's between jobs, said after he offloaded the snipper for $30. In the past month, he sold an iPhone and got a loan at Cash Converters, whose sales last year grew faster than any other Australian retailer that didn't make a major acquisition. “It just feels bad out there.”

While the mining-investment boom has sustained Australia's growth and employment, many like Cox have missed out and instead seen finances stretched by high housing costs, driving them into the arms of pawnbrokers.

Reserve Bank efforts to plug the gap with record-low interest rates are bypassing lower-income households, which account for just 6 per cent of the nation's home buyers, while government and opposition pledges to return the budget to surplus mean support for the most marginalised has declined as welfare payments stagnate.

Advertisement “I'm not surprised,” Bernie Fraser, whose tenure as Reserve Bank governor from 1989 to 1996 included the last recession in 1991, said of the increasing use of pawnbrokers. “I think that's pretty heavily correlated with a lot of people doing things tough, and that's going to continue I believe.”

Cash Converters - which offers pawnbroking, payday loans, goods sales and installment loans - recorded the fastest growth of any etailer with more than $100 million in sales last year that didn't see revenue boosted by a major purchase, data compiled by Bloomberg show. Revenue jumped 26 per cent in 2012. In contrast, sales at the largest electrical-goods retailer, Harvey Norman, fell 7.6 per cent.

“Part of why we've got that growth could well be the economy,” said Peter Cumins, managing director at Perth-based Cash Converters, who added that store locations are chosen for proximity to households with stretched finances. “Certainly, we are recession proof in that regard.”

Australia has posted the developed world's quickest growth rates as demand from China fueled a once-in-a-century mining- investment boom. That's souring as China's outlook deteriorates and the Aussie dollar's strength forces companies including Ford to cut workers and close plants.

Aussie QE?

Economists at Macquarie Group see a 40 per cent chance of recession in the next 12 months - defined locally as two consecutive quarters of contraction - even after the central bank cut rates to a record-low 2.75 per cent. Saul Eslake, chief economist for Bank of America Merrill Lynch in Melbourne, projects a 25 per cent chance for 2015.

“We expect the RBA to cut further - to as low as 1 per cent in the event of a recession - and it may need to undertake a 'Down Under QE,'” Eslake wrote in a June 14 note to clients, referring to a local version of the Federal Reserve's quantitative-easing policy to support economic growth.

South of Melbourne, Victoria's state capital, some of pawnbroker Joe Yammouni's customers are coming to his store, Cash Deal, on the Mornington Peninsula for the first time since he opened in 2001.

'Unexpected bills'

“I'm talking your average family members who you wouldn't have seen before, who come in and say 'I'm so embarrassed for being here,'” he said. “Things are tight at the moment; they just get unexpected bills or payments come through and they have to use our services.”

A decline in new electronic product prices is compounding difficulties for people selling goods for cash, said Yammouni, 41, who has worked in the industry since 1994. A $3,000 TV that could be resold for $1,000 five years ago now retails for about $400, and as a reseller today, “you'd take whatever you could get,” he said.

One in eight Australians and one in six children live below the poverty line, according to a report last year by the Australian Council of Social Service. The group defines the level as 50 per cent of median disposable income, a standard measure of financial hardship in wealthy countries, it says.

Jobless payments

That was $358 per week for a single adult in 2010 and $752 for a couple with two children, the October 2012 Acoss report showed. Australia's unemployed receive $248.50 a week for as long as they demonstrate an active search for work, a payment that's been indexed to inflation for more than 30 years.

An increase beyond consumer-price growth is unlikely as Australia's slowdown curbs tax revenue and both major political parties vow to return the budget to balance.

“The existing government, and even more so the incoming government, are making it clear they're not going to use that fiscal-policy instrument, which is crazy really,” said Fraser, 72, who was also secretary to the Treasury from 1984 to 1989. “Monetary policy doesn't have any distributional consequences.”

While a home owner with a $300,000 mortgage is about $300 a month better off since the RBA started cutting rates in November 2011, few lower-income households are benefiting. The proportion of Australian homebuyers in the bottom 40 per cent of incomes is just 6 per cent, according to the Australian Housing and Urban Research Institute.

More loans

Cash Converters also has outlets in the UK, Spain and Dubai, where it targets arriving and departing expatriates trading second-hand goods. Its personal-loan book in Australia increased by 25 per cent in the six months through December to $84.2 million. Its cash-advance business rose 7.1 per cent to $126.5 million loaned, while the number of active customers climbed 16 per cent. Store sales grew 6.5 per cent.

Cash Converters shares have jumped 71 per cent in the past 12 months, versus a 48 per cent gain for the S&P/ASX 200 Retailing Index.

Australia's economy grew 2.5 per cent in the first quarter from a year earlier, the slowest pace in almost two years. While unemployment was 5.5 per cent in May, it was 10 per cent or higher in 9.6 per cent of the nation's 1,402 regions during the fourth quarter, according to government data. The level was 14 per cent for Bankstown in Sydney's west.

Mortgage arrears rose in March - indicating lower borrowing costs aren't sufficient for some households - and a record number of the nation's companies went bust in April.

Businesses squeezed

Grant Russell has had “quite a lot of business people who are literally financing their staff” by pawning personal possessions such as family jewelry during the past 12 months at his Cash Centre store in the outer Melbourne town of Frankston.

Russell, who also heads the Victorian Independent Pawnbrokers Association and is a 24-year industry veteran, said the value of items is “dropping quite rapidly,” and stores are becoming more selective in what they'll accept. Many are so full of power tools from tradesmen waiting on delayed payments that they will no longer offer credit on the equipment, he said.

The practice of hocking goods shot to prominence in the past five years with the advent of television programs such as “Pawn Stars,” which first aired in 2009 as the US economy struggled to emerge from the deepest recession since the 1930s. It was followed a year later by “Hardcore Pawn,” set in Detroit, a city that's battling potential bankruptcy.

Russell said the American programs fuelled misconceptions in Australia that people offered “weird and wonderful things” to hock. “It's bread and butter items that people bring in: video games, flat-panel TVs, laptop computers, always there's a few power tools,” he said.

Outside Cash Converters in Bankstown, Cox said he wasn't surprised to learn the pawnbroker is Australia's best-performing retailer. A staff member told him during the sale of the edge trimmer that the iPhone he brought in the prior week had been sold for almost double what he was paid.

“That's business and they do it well,” Cox said.

Read more: http://www.theage.com.au/business/p...in-slowdown-20130701-2p5uh.html#ixzz2Xqk30cRk
 
I'm sure we can put some bullish spin on that?

"Job prospects on the rise as Aussie retailer booms"

"CIP on the move as Australian retailer looks to expand operations"

"Value of secondhand goods drops as record personal wealth reaches record and sees consumers buying new"

"Bills paid ontime with introduction of PGBS (Personal Goods Backed Securities)"

Don't be such a doom and gloomer!
 
I just find it interesting that pawn shops are doing well in the age of online auction/listing sites, you can sell an iphone pretty easily on ebay or even gumtree.
 
I'm sure we can put some bullish spin on that?

"Job prospects on the rise as Aussie retailer booms"

"CIP on the move as Australian retailer looks to expand operations"

"Value of secondhand goods drops as record personal wealth reaches record and sees consumers buying new"

"Bills paid ontime with introduction of PGBS (Personal Goods Backed Securities)"

Don't be such a doom and gloomer!

You've got it all wrong - if interest rates are going down, down, down, what do you think will happen to property prices?
 
I just find it interesting that pawn shops are doing well in the age of online auction/listing sites, you can sell an iphone pretty easily on ebay or even gumtree.

I think you'll see those sites have experienced a boom too, the real attractiveness of Cash Converters and other pawn brokers though is the instant cash they provide. Gumtree is pretty instant too, but EBay can be weeks.
 
Both are good shows, but Hardcore Pawn is better than Pawn Stars because Les stands up to any dodgy character who gets in his face.

Agree that Hardcore Pawn is better, but NONE of them are good shows.

I'd say the same for most television, be it fee-to-air or pay. The Block etc, is just thinly-disguised advertising done on the cheap. The cost for quality scripted content in Australia is around $1M per hour. Sport and reality tv shows are extremely cheap to make.
 
Agree that Hardcore Pawn is better, but NONE of them are good shows.

I'd say the same for most television, be it fee-to-air or pay. The Block etc, is just thinly-disguised advertising done on the cheap. The cost for quality scripted content in Australia is around $1M per hour. Sport and reality tv shows are extremely cheap to make.

I meant good, purely for entertainment purposes.
What else would you expect from a Pawn shop in Detroit.
 
cashies is actually a great place to buy something.

a lot of people dont like talking one-on-one when negotiating, in fact, aussies hate it, generally. so rather than go on gumtree, they go to cashies.

i'm not surprised by this at all. my best mate used to manage cashies at osborne park - i've heard some stories.
 
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