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Wednesday 19.09.2018 | Name days: Verners, Muntis

Lombards24.lv: job seekers fear pawn shops

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Baltic news, News from Latvia, BNN-NEWS.COM, BNN-NEWS.RU, Agris Evertosvskis

Board Chairman of Lombads24.lv Agris Evertosvskis

People have numerous misconceptions about pawn shops, says Agris Evertosvskis, Board Chairman of Lombads24.lv – the leading pawn shop chain in Latvia, adding that this negative reputation often interferes with finding a competent employee despite a competitive salary indeed. Professional thieves never go to pawn shops, they rather visit flea markets, he told in an interview to news portal BNN.

How come you have taken up pawn shops?

In 2008, a friend of mine, who had been in that sector for years, offered me to launch a pawn shop together with him. Back then, people had more free money. I aspired for some additional business. Initially, it was just a single pawn shop on Dzirnavu Street 119. It turned out the business was quite successful and we posted profit in a half-year’s time.

After that a financial consultant I know came with a proposal to develop this sector by creating a modern chain of pawn shops. We started off in October 2009 by setting up 50 branches in ten months time. At the moment we have 64 branches in 32 cities. We are set to launch yet another six in two months.

What is your key to success?

There is a misconception, I must say that quite a right one though, that pawn shows are ugly, dark, dirty and with grumpy staff. Our idea was to open a pawn shop with big shopping windows and high service.

What is pawn shop market like in Latvia? What are the trends?

There are about 250 branches. In terms of companies managing them, there are four leading chains, also some smaller ones and finally individual economic operators as well. Now there is a law aimed at arranging the market. Pawn shops need to purchase a license that costs 50 000 lats. This money is meant to ensure control and eliminate unfair businesses. It also limits those economic operators who sell pledged goods or those that have not enrolled in the loan repayment period, which is a contractual violation.

In terms of trends, many businessmen thought that bun, second-hand clothing and pawn shop businesses were flourishing during the crisis. So many of them launched their own pawnshops and the competition grew fiercer. It changed the face of them. Pawn shops operating before that cared neither for merchandise, not service.

What impact did the crisis have on pawn shops?

People often have two notions about pawn shops. One of them is the above mentioned that they are doing well in the crisis, while the other – that most of the goods stay with us. These are misconceptions. First and foremost, pawnshops are doing worse during a crisis than in an economic upturn. It is because people are passive at times of a recession. Our business is lending money. During an economic upturn, people borrow more and they have more regular incomes. So they know exactly when they will be able to repay the loan. They know when the salary will be. If they are short of money, they come and pledge something. If the person is in a total crisis, he will not pledge a TV set, because it is possible to make more selling it via advertisements. Similalry, during an economic upheaval, there are more clients- business people. They need short-term loans, so that they can buy some equipment or fix something. Then they bring something more valuable, for example, a huge piece of gold or a car. Such businesses are usually not very successful during a crisis.

Another notion is that people never return for their goods. And it is wrong as well. Usually people pledge goods that they really need. For example, if a person has a watch worth 2 000 lats, he cannot use it to get a loan from a bank. But it is a valuable thing after all. But you cannot get a loan in exchange for that. Pawn shops in turn give him 1 000 lats for that and the person is sure that he will return, pay the interest and get it back. Of all goods pledged, only some 15% remain with us. The rest – 85% are bought back and the share tends to increase.

Do gold price gains have an impact on your business? Do more people sell off gold?

Gradual price gains are better than slow price drops, because the latter can result in us making less than we lent if the person is not returning. Along with gold price gains, rivals raise the rate for gold. So the proportion levels out. Back when we started we gave 6 lats for a gram of gold, while it is 14-15 lats today.

It is not that people pledge more gold because of these price hikes. Seasons also play a role. We have more clients in autumn and winter, while less in summers when people relax, pick berries and mushrooms.

What goods are pledged most often?

It is gold and silver, since they are valuable and easy to bring. People also pledge electric appliances, including mobile phones, followed by TV sets, DVDs, radios, electric instruments. Less watches and household appliances.

How do you set the value of them?

Employees know the value of the most popular goods by heart. More specific things are valued judging from their value in online stores. Depending on for how much it is possible to sell the item, we set the value within the limits of 50-70%. Thus we are taking into account the risk if the person is not returning and we have to put it up for sale. Specific goods that we might fail to sell have smaller rates, for example, skis in summer.

What is your opinion on limiting pawn shop working hours? Can this help in fight against pledging stolen goods?

The idea of this regulation is to fight stolen goods and possibly also to boost virtues of the society. So that people do not wander around at nights. However, this could have been done also differently, because we cannot say that people bring only stolen goods at night and their own during day time. Government should have first tried to boost collaboration between the police and pawn shops. Each and every person has to produce his passport before pledging something. So if we had lists or pictures of these thieves, practically we could detain them, because we do not benefit from stolen goods. There is no organized national-scale collaboration.

Did the number of your clients drop afterwards?

The number of loans we have issued is down 15%. Of course, if the person is in a real need for money, he can easily come in the morning as well.

What the state actually lost with this regulation is that we were forced to cut 20-30% jobs, so the number of taxes we pay was down proportionally. And unemployment was up.

How is it possible to avoid acceptance of stolen goods? What are the suggestions?

What the government should have started with is to launch a fight against those who buy stolen goods, for example, near the central market and flea market. Circulation of stolen goods is much higher there than in all pawn shops taken together. Professional thieves never go to pawn shops, because they know that they will have to present their names.

Some pawn shops still work at night, violating the regulation. They simply have changed their name to a dealer or commission shop. It exactly what the government feared. Pawn shops as us suffer from that, so the law is rather incomplete.

This was more like a politic decision. Maybe there was some kind of pressure from the society. The law was popular enough. But practically it is neither tackling circulation of stolen goods, nor contributing to the virtues of the society

Can you check somehow that the item is not stolen?

Well, it is never written on it that it is stolen. If there is any suspicion, the employee can ask, for example, for the password or parameters of a computer. If it is really a property of that person, he should know all the details about the memory or hard drive. Similarly, an 18-year-old simply cannot have architectural projects on his computer memory. There are certain criteria that we consider. As a result, we can simply refuse to accept the item.

Do you also have loyal clients?

Most of them. It is because visiting pawn shops is after all an intimate process. Just like people usually go to a single dentist, they also visit one an the same pawn shop. People need to know that what they pledge is safe. They also care for service.

I should add that the global short-term crediting market is huge. Also in Latvia, online credit market is impressive. However, it is not available for people with bad credit history. And there are a lot of such persons. Neither is the market available for those that do not have an Internet connection. Statistics show that it is about a half of Latvian population. So, if these people run out of money, they are left with borrowing from their neigbour or a pawn shop. Just recently we launched a new product – a loan without a pledge up to 100 lats. It is meant for people with good credit history and regular income, but no Internet access.

Will the opinion of pawn shops ever change in Latvia?

The public opinion is changing very slow. I assume that pawn shops once had a better reputation. The first pawn shop in Latvia was launched in the pre-war period. They appeared even before banks. Pawn shops practically perform some kind of a social function. It is the only way out if the neigbour and the bank refuses.

Because of wrong misconceptions about pawnshops, it is really difficult to find competent employees. Many of them cannot even imagine working in a pawnshop despite such a job is actually no worse than being a shop assistant in Statoil. Moreover, salaries are competitive indeed.


Leave a reply

  1. Ren says:

    Surely, those misconceptions about pawn shops stem from somewhere. Another thing is whether such companies do something to prove the opposite.

  2. nummi says:

    Not only potential job seekers do not want to come close those places, it is also ordinary passer-bys who avoid them. but the main thing is that it is business for someone and we could not do without pawn shops either.

  3. Lena says:

    It seems a good deal . Why not.

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