In the Victoria branch of T.M. Sutton pawnbrokers, between the glass cabinets of designer watches and jewelry, is a life-sized bronze statue of Elvis Presley.
Its one-time owner, Sid Shaw, made headlines in the late 1990s with a landmark ruling that changed UK trademark law, winning the rights to distribute Elvis merchandise in Europe from the Presley estate, which he had supplied with souvenirs in the 1980s.
“They sued me on the basis that I sold Elvis Presley ladies underwear with ‘Are You Lonesome Tonight?’, ‘It’s Now or Never’, and ‘Love Me Tender’ on them,” Shaw told the Huffington Post UK. “They said it was demeaning Elvis Presley.”
“Now the Elvis Presley estate sells Elvis Presley panties. But that’s what they sued me for.”
After the ruling, Shaw, who runs the website Elvisly Yours, was left with 38 trademarks in the UK and Europe. However, soon afterwards his wife was diagnosed with cancer. He looked after her for seven years until her death, before deciding to resurrect the business. The banks, however, were not forthcoming.
“The banks are a joke,” Shaw said. “They look at the bottom line, and the bottom line is that my wife was ill with cancer and I neglected my business. But I own the rights to Elvis Presley and those trademarks have value.”
In need of capital, Shaw turned to T.M. Sutton, pawning a statue that had travelled with him up and down the country and overseas, got him across borders without a passport, saved him from arrest and made appearances in a Rolling Stones music video, on Top of the Pops and Blue Peter.
In an austere office behind three more locked doors, Jim Tannahill, T.M. Sutton’s director, explained that Shaw’s story is increasingly typical in an environment where credit for businesses and individuals is constrained.
“When the credit crunch first took hold there were lots of building contractors, with building works still going on, things weren’t selling but subcontractors still had to pay their labourers. So the plasterer, plumber, they all needed paying, but the subcontractor wasn’t being paid themselves,” he said.
Tannahill has been in pawnbroking for 30 years, and has witnessed its evolution from a fragmented, weakly regulated industry to an image conscious, professionalised business with a ubiquitous presence on the high street.
Suttons and Robertsons, the umbrella group formed by the merger in 2006 of two of London’s oldest pawnbrokers, T.M. Sutton and Robertsons, typically lends 30 times the industry average of £150-200 per transaction.
This growth is happening to varying degrees across all market segments. As the industry has expanded, it has grown to serve both the top and bottom ends of the income spectrum, and made inroads into the UK’s “squeezed middle”.
The new rise of the pawnbroker has had some commentators fretting over the return of the Dickensian lender of last resort in the face of widespread financial stress, recalling the avaricious, acquisitive pawnbroker of literature. With its outlets taking up prominent places on high streets devastated by a retail slump, it is easy to see why.
However, while leaders in the industry admit that the combination of tightened credit and retrenchment of the high street the banking industry inevitably helped their business, they are all keen to point out that trend predates the financial crisis, and has many more drivers, both socially and financially.
“Before [the credit crunch] you had banks that didn’t really want to be involved in face-to-face lending of a few hundred pounds. If you go into many towns, what were banks won’t be banks anymore. They’ll be theme pubs,” Tannahill said.
“That was happening quite a good few years ago. The seeds of the industry’s growth were beginning to be sown anyway.”
Today pawnbrokers are shrugging off their negative image to become slicker, smarter and more accessible, while, in the post-eBay era, customers are savvier and far less concerned about the stigma of pawning or selling their possessions.
From a few hundred outlets at the turn of the Millennium, there are now around 1,300 on British high streets, offering pawnbroking and associated services.
David Patrick, CEO of Cash Converters, told the Huffington Post UK that he used to have to site his stores near parking, because of the bulk of the old CRT televisions that customers would bring in and out.
“Nowadays you can put a flat-screen under your arm and carry it to our stores,” Patrick said.
Cash Converters opened its 200th store in 2011, and is aiming to hit 250 locations during 2012, as a combination of cheaper rents, a lack of alternative credit facilities and a shift in people’s attitudes towards using their goods to generate cash drives its resurgence.
“What’s really helped our business is Ebay, because people have the confidence to sell pre-owned goods to turn their unwanted gifts into cash. It wasn’t seen as being on your last legs.”
While the internet has pulled business from the high street, pawnbroking remains largely a face-to-face, bricks-and-mortar industry – although online-led offerings such as Borro give some indication of where the industry’s future might lie. Rents on the high street have dropped, outside of London at least.
“Before, when we were in our infancy we could only get tertiary positions because of the ridiculous rents that landlords were charging,” Patrick said. ”Now… we’re getting more competitive rents, because we’re prepared to invest to 10-15 year periods and we’re getting good deals.”
The industry entered the recession relatively cash-rich, due in part to the stellar rise of the gold price. Wholesale gold went from around $275 per troy ounce in 2000 to upwards of $1,400 in 2010, driving profit growth. Pawnbrokers used the money to update their image and to take on vacant properties.
Cash Converters stores today look and feel like other retail outlets – Patrick compares them to the Argos catalogue stores – a key factor in normalising the pawnbroking experience for customers that might otherwise struggle to cross their threshold. Others have done the same.
“We have tried to modernise the face of the industry on the high street, pawnbroking stores are standalone stores on the high street and they look the same as any other bank or building society or jewelry store,” John Nichols, CEO of pawnbroker H&T, told the Huffington Post UK.
In 2011, H&T grew from 135 stores to 160 in the UK, and this normalisation process –putting them on equal footing with banks and building societies as lenders – has been helped.
“10 or 15 years ago they were generally speaking, a secondary occupation of a jewelers’ shop, the entrance was round the back and nobody ever really saw any consumer facing evidence of pawnbrokers. We changed that and we made them pawnbroking stores in their own right,” Nichols said.
“Now it’s not uncommon to find two or three pawnbroking shops on the same high street in exactly the same way that you have three or four coffee outlets or banks.”
What helps more, Alaric Churchill, commercial director of Albermarle and Bond - which has 169 stores and plans to open another 25 in 2012 - said, is that people have lost trust in banks, pushing them towards other forms of credit.
Renewed focus on overdraft and credit card charges – including an investigation by the Office of Fair Trading – has threatened to open up the opaque system of calculations made by the consumer credit sector.
“I have been in banking. I’m now in the most honest and transparent business I’ve ever been in,” Churchill said.
He, like all of the other pawnbrokers interviewed by the Huffington Post UK, was quick to make the point that the transaction is a secured, pre-paid loan. If a borrower defaults, that is the end. There are no debt collectors and no spiral of debt.
Like the others, he is also insistent that the view that pawnbrokers want to keep the goods offered as security is “a total fallacy.”
Goods are typically sold at public auction, with the pawnbroker keeping the principal and the interest accrued. The rest of the money is typically returned to the borrower, meaning that the pawnbroker gains little advantage from a default.
Besides, Churchill added, with as many as 95% of customers coming back for more loans, giving them back their security means that they will probably use it again.
“We need to keep that asset in that person’s hands, because that person then has an asset that they can use in the future. If you wanted to take the assets off all of your customers then you would be shooting yourself in the foot.”
Sid Shaw is still holding out some hope that he might get his statue back, although after the loan went through an injury left him incapacitated for a year, temporarily derailing his business plans. If not, he said, there are plenty of casinos and Elvis museums that would be willing to take it off Jim Tannahill’s hands.