The Local: The Shiest Retail Remains Steady in Recession

providentloansocietyedenpictures The Local: The Shiest Retail Remains Steady in Recession Gary Gross’ family has operated a pawnshop near Penn Station for more than a century. Though he was not around during the “real depression” in the 1920s, S&G Gross Co. has emerged more or less unscathed from multiple economic downturns in Mr. Gross’ lifetime.

The bursting of the tech bubble in the beginning of the decade barely made a dent in the lending or retail side of what is formally known as the “collateralized loan brokerage” industry—though Mr. Gross’ personal portfolio took a hit. The late 1970s was a “disastrous” time because the cost of lending went up, he said, but it, too, was short-lived. S&G Gross Co. has been making an average of 10 percent more loans since the current crisis on Wall Street began, Mr. Gross estimated.

“I can’t say we’re feeling it dramatically,” he said at his pawnshop last week. “I wasn’t here in 1929, when people literally did not have anything to pawn, but generally we do well in bad times and good. People always want a little more than they can afford.”

Like the other pawnshops in Manhattan and the Bronx that I spoke with, S & G Gross Co. relies on interest payments from repeat customers, rather than sales of pawned items. About 90 percent of Mr. Gross’ clients are “municipal workers, Post Office workers, people that maybe work in hotels, hospitals, the transit authority,” who repeatedly take loans out against the same item.

No “Lehman Brothers brokers” have come through the door to pawn their Rolexes yet, he said, but the clientele is “not as down and out as you might think.”

“A Post Office worker gets paid every month,” Mr. Gross offered of a typical loan. “He might drop something off a week before he gets paid and pick it up afterwards. We have people who pawn the same thing over and over again. One week they’ll come in and ask for $300. One week for $400. One week they’ll say ‘I just need $100.’"

As long as regulars continue to pawn their valuables, and more importantly redeem them within four months before they are sold, S&G Gross Co. and the pawnbroker industry should continue to be recession proof. Some may even benefit.

Gary Popilevsky, the manager of Century Pawn Brokers Inc. at 725 Eighth Avenue, said pawning has gone well since the recession kicked in, while retail sales are only “O.K.”

“It hasn’t been crazy, but it hasn’t’ been slow,” he said from behind the protective plastic barrier in the back of the shop. “We’ve maybe had a couple of new customers, but nothing really, yet. This business has been good when the economy is doing well, and it’s steady now.”

On the Upper East Side, where investment bankers are plentiful but pawnshops few and far between, the Provident Loan Society branch on East 72nd Street has seen loans increase 30 percent or more since economic turmoil beset the city.

“Business has definitely been improving since we started hearing about problems with the economy,” said manager Sarah Wirnik. “Retail has not changed, but they are making a lot of new loans.”

The Provident Loan Society makes loans of between $25 and $50,000 per person against jewelry and sterling silver flatware and hollow ware.

Even though a person can redeem each item on a ticket separately, said Ms. Wirnik, a customer will usually come in over the course of a week and make four loans of $12,000 each. “They don’t tell me [what they do] because they are embarrassed to come here,” Ms. Wirnik said over the phone. “They say ‘there’s a money crunch and that they will be back to redeem it in a few weeks,’ which is not always the case.”

But the “high-end” items they are hawking—last week, for instance, a $40,000 silver sculpture and a $50,000 diamond bracelet were pawned—indicate that a higher-profile clientele are turning to pawnshops now than did during the boom years.

New York Pawnbrokers, which has one location in the South Bronx and two in Manhattan on the Lower East Side and at 207th and Broadway, has had more action over the past year at all three branches, said manager Blaine Messenger. The upturn is due partly to the PR the pawn industry has received lately, he said, as well as the increased price of gold, which has allowed pawn brokers to boost interest rates on gold jewelry.

But aside from a few new clients, their customer base remains the same.

“Clientele is anybody and everybody,” Mr. Messenger said. “Our customers know us for many years. The people that do pawn are regulars. We have the same people coming in at all the stores, but the demographics of each location are different. The Lower East Side is sort of a yuppie, artist group, but we’re not on Fifth Avenue in the 60s or anything like that.”