As a Pawnbroker with over 25 years of experience in the pawn industry, I’ve always believed the best asset to invest in and drive my business was jewelry. Firearms were always a distant number two. Depending on your expertise and what you were most knowledgeable of, the 3rd biggest revenue driver typically varied from one store to the next.
Having had the opportunity to supervise over 160 pawn shops across 9 states in the first 22 years of my career, there was never a reason to question those assessments. Over the last 3 years though, my eyes have opened to a category I viewed as “a fun little side business” for far too long.
As I learned more about luxury handbags and how to authenticate and value them, I realized there were millions of dollars in profit and pawn service charges that went by the wayside due to a lack of interest and knowledge in luxury goods.
By the time my shops sold in May of 2021, 25% of them had higher sales in handbags than jewelry and that gap was widening every month. In addition to the sales, the loan balance followed suit. It was fascinating to watch the biggest revenue streams become jewelry and handbags, with firearms remaining at a distant third.
For those of you in the firearms business, you know the sales boom with firearms that took place during COVID. Handbags surpassed that surge without breaking stride. It was incredible.
When the stores I had been managing were sold, I was offered an opportunity to transition in my career. I knew I felt committed to the pawn industry and wanted to make sure I stayed connected. It was important to me I could give back to the industry that always supported my family. Joining a company like Marque Luxury has afforded me the opportunity to do just that. At Marque, we partner with our clients and teach the luxury business to other pawnbrokers as they learn about this very lucrative revenue stream.
As you can see in the graphic provided, the value of Louis Vuitton “Neverful” sold in 2007 for $645, while today if you can find it in stock, it sells for $2040. Coincidentally, gold was worth $696 per ounce in 2007 and in 2022, gold now trades at $1980. Chanel Flaps have soured past both growing 258%, also surpassing the growth of the stock market which has been 222%.
For any shop that is trying to get into the handbag business, starting with inventory is key. As all skilled pawnbrokers know, when you put items out for sale, your customers will bring you anything and everything that resembles it. This is true for everything from Rolex watches to exercise equipment and everything in between, and the handbag business is no different.
Handbags Drive Revenue
Having a display of 12-15 handbag pieces in your store will showcase you are in the business, while 2-3 on display will give the impression you take them in on loan on occasion, but aren’t well versed in the product. In addition to the inventory, you will need a way to authenticate the bags. One counterfeit handbag has the potential to wipe out the margin on ten good ones. Beginning with a trusted handbag source that will partner with you as you grow is the best way to get started.
Sean Makovsky National Business Development Director, Marque Luxury