Business & Professional
ENTREPRENEUR
Booming Business
As the economy suffers, pawnshops see an increase in traffic.
Bill Carroll
Special to the Jewish News
T
he current economic meltdown
has been good for business at
American Jewelry and Loan in
Detroit and many of the 25 other pawn-
broker businesses in the Detroit area, sev-
eral of them also Jewish-owned.
"I think we've successfully removed the
sigma of the old pawnshops, improved our
image and created a whole new loan busi-
ness ere said Les Gold, 59, of Bloomfield
Hills, who owns American Jewelry and
Loan with his son, Seth, 28, of West
Bloomfield. "As the economy worsened
in the past few years, our business has
grown:'
They are part of a four-generation
Jewish family that has operated the pawn-
shop since 1947 when Les Gold's grand-
father, Sam Rubin, opened Sam's Loan
— with that old pawnshop sign — at
Michigan Avenue and Fifth in Detroit.
When Sam came to America in the
1920s, he started collecting refuse on
Detroit streets and looking through it for
valuables. He eventually opened his own
store. His son-in-law, Lou Gold, took over
in 1950, and Lou's son, Les, began work-
ing there part-time in 1957, accepting a
hydraulic jack as collateral for his first
loan at the age of 7. Les' son, Seth, also
joined the company as a youngster. The
business later was moved to the former
Green-8 Shopping Center in Oak Park,
then to its current location on Greenfield,
just south of Eight Mile.
Both Les and Seth originally eyed medi-
cal careers, with Les taking three years
of pre-medicine courses at Wayne State
University in Detroit and Seth preparing
for pre-med after getting a psychology
degree at the University of Michigan in
Ann Arbor. "But we both finally realized
how much we love the pawnshop busi-
ness:' Les reflected. "It's a fascinating,
highly lucrative business and we've devel-
oped a great reputation in the community;
people feel comfortable and safe coming
in here'
Added Seth: "I worked here part time
while I went to school and I realized the
great potential of American Jewelry and
Loan; I wanted to be at the forefront of
this historic family business."
The Golds thus shunned medical lab
coats for their daily garb of sports jackets,
34
December 17 2009
Seth Gold and his father, Les, check some of their watches.
blue jeans, neck chains and earrings to
better blend in with most of the people
who frequent pawnshops. The store usu-
ally is bubbling with activity, especially
during this holiday season. The huge
parking lot gets filled quickly and long
lines form inside as patrons clutch bags or
boxes with items they want to offer as col-
lateral for a loan.
American Jewelry and Loan makes
hundreds of loans daily and its short-
term loan business is up 20 percent over
last year. Retail revenue is expected to
be in the $2.5-$3 million range for this
year, according to Les Gold. The store
has an inventory of 45,000 pawned items
— ranging from jewelry to classic cars
— which can be redeemed or sold to
other customers.
Patrons typically receive 15-20 percent
of the value of a pawned item, which
has to be kept by the store as long as the
customer pays 3 percent interest and a
$1 storage fee per month for 90 days.
Otherwise, other customers can buy the
item, usually at about 65 percent below
retail. The forfeiture rate for pawned items
rises as the economy falls.
Jewelry, including pawned five-carat
diamonds, takes up a big portion of the
inventory at the 50,000-square-foot for-
mer bowling alley. Long-time customer
Mary Krasman of West Bloomfield calls it
"the warehouse of Fantasy Island," because
customers also can buy custom-made
jewelry there "at a fraction of the cost at
other stores:' she said. "I had purchased
a $6,000 necklace in Italy that broke and
they recreated the necklace as a beautiful
piece of jewelry"
While the store sells pawned second-
hand furniture, it also has a section of
brand new furniture in a department
started by employee Dennis Kaminer of
Oak Park, who spent 30 years at the old
Robinson's Furniture Store in Detroit.
"Some of the items that came in here on
loans looked banged-up, so I convinced
the Golds to also maintain a section of
brand new furniture to avoid a schlocky
look:' he said. "We now sell about 10 sets
of sofas, chairs and tables per month!'
The store's front showroom has 10,000
square feet; the other 40,000 is crammed
with boats, television sets, DVD players,
lawn mowers, snow blowers, bicycles, jet
skis, gas grilles, musical instruments and
every other conceivable item. About 5,000
fur coats dominate the rear of the storage
area.
"There's nothing of value that we don't
take emphasized Les Gold. "And we keep
everything in perfect working order for
retail sale. Another building nearby hous-
es 15 classic cars, ready to be driven out
of here — some pawned for only $20,000.
Most of the owners really have no inten-
tion of ever losing these cars, but they
need the money now
"Another example is gold; a lot of
merchants seem to be buying it now and
people are selling to pick up quick cash.
But at our place, they can take out_a_loan --
on their gold-and evetitully get it back.
Women especially want to retrieve jewelry
that has sentimental value for them."
Seth Gold pointed out that "an eco-
nomic downturn always means increased
business. When long lines form outside
the store, it often coincides with an
announced increase in unemployment.
And our clientele keeps changing. We're
seeing more and more people from the
northern suburbs, like Bloomfield Hills,
West Bloomfield, Farmington Hills and
other similar cities. Everyone has been
affected by the economy."
To attract customers, American Jewelry
and Loan spends about $250,000 a year
on advertising, including TV, radio, news-
papers and billboards, according to Les
Gold. "That's an awful lot of money, but it's
absolutely necessary in this business."
The store's 45 employees are kept
busy as customers seek loans or inspect
the merchandise, choosing pawnshop
bargains over traditional retailers. The
National Pawnbrokers Association, a
2,400-member trade organization, says
it doesn't keep official national statistics
about whether business is up because of
the economic situation or the holidays.
"But:' said Les Gold,"we're doing fine II
Les Gold and his son, Seth, have
an extensive collection of musical
instruments in the store.