Regulatory changes limiting interest rate levels and other fees have been introduced to protect vulnerable borrowers.
Melbourne, Australia (PRWEB) October 06, 2013
The Pawn Shops industry in Australia has suffered from a negative public image that has resulted from the high interest rates they charge on loans, the low prices offered to customers for goods and a perception that pawnbrokers take financial advantage of those most in need. According to IBISWorld industry analyst Alen Allday, “while this negative perception has potentially limited industry growth over the past few decades, major player Cash Converters has provided the industry with a more legitimate and professional image.” This has increased the market reach and customer base for industry operators.
In the five years through 2013-14, industry revenue is estimated to increase at an annualised 3.1% to $462.6 million, including 2.8% growth in 2013-14. “External competition from online auction sites and other loan providers continues to increase, which has contributed to lower margins across the industry in the past five years and limited industry revenue growth,” says Allday. Regulatory changes limiting interest rate levels and other fees have been introduced to protect vulnerable borrowers. These changes are expected to constrain industry revenue growth in future years.
The Pawn Shops industry is dominated by Cash Converters International Limited, which has 149 outlets across Australia, giving the industry a medium level of market concentration. The next largest pawn shop company in Australia only has six stores and accounts for a much smaller share of industry revenue for the year. In the almost three decades since its establishment, Cash Converters has found its niche in a highly fragmented industry through its franchise model and by building its brand image through local and national advertising campaigns. Future growth is expected to be lower than previous years, but with steady increases as Cash Converters continues to open new stores and expand into other geographic regions. However, this expansion will be at the expense of other industry operators, which are expected to either close down or be acquired by Cash Converters.
For more information, visit IBISWorld’s Pawn Shops in Australia industry report page.
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IBISWorld industry Report Key Topics
Pawn shops offer secured loans to individuals, who then provide items of personal property as collateral. These firms also retail used goods that are often acquired from unpaid loans or are purchased directly from consumers. The industry excludes companies that only provide unsecured loans or only sell second-hand goods.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Basis of Competition
Barriers to Entry
Technology & Systems
Regulation & Policy
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