By Rachel Adams-Heard and Jason Cleary
The Rockbridge area got a new pawn and payday loan shop last month when Valley Pawn opened in the previous Café Michel on Lee Highway North.
Owner Joshua Davis, who bought Valley Pawn’s original Staunton store in January, said the Lexington location will sell more electronics and higher-priced products than the Staunton store, which has been open for about 30 years.
“This is going to be set up like a regular retail outlet,” said Davis. The store, which opened Nov. 9, will carry TVs, smart phones, jewelry – and even guns, once it obtains a license to do so.
In addition to retail goods, the store will offer loans for people with credit problems. Davis wants Valley Pawn to be a resource for those who are ineligible for standard loans. He said people most commonly seek loans to pay medical or pharmaceutical bills.
According to the National Pawnbrokers Association, 88 percent of pawnbrokers say their most common transaction is loans. On average, these are small loans, typically $150 for 30 days, according to the industry group.
Interest rates on these loans tend to be high, with the typical annual interest rate ranging from 391 to 521 percent for two-week payday loans, according to the Center for Responsible Lending, a non-profit research group based in Durham, N.C.
Davis, who lives in Richmond and is a native of Virginia, has worked in the pawn and loan industry for several years. He currently operates more than 300 loan and personal finance centers across the state and said he plans on expanding his pawn shop ownership in the near future.
Davis said he chose Lexington because of its middle-class demographic and low competition. Communities with a median household income of $34,000 to $50,000 are ideal for a pawn shop, said Davis. Lexington’s is a little more than $36,000 and Rockbridge County’s is slightly more than $48,000, according to the most recent data by the U.S. Census Bureau.
![Pawnshop](https://rockbridgereport.academic.wlu.edu/files/2015/12/Pawnshop-300x225.jpg)
“You got to have people who need money, but you also need people who have money,” said Davis.
While there are several other payday lenders in the area, Lexington is home to just one other pawn shop – 60 West Pawn. After visiting 60 West, Davis said he was confident the two stores would target customers looking for different goods.
“We’re very corporate oriented,” said Davis. “We’ll have TVs on the walls…It’s going to be a little bit different.”
Valley Pawn also offers a 30-day money-back guarantee on all of its products, which Davis said will win over customers looking for higher-end products such as laptops and smart phones.
It’s not just pawn shops that Valley Pawn will compete with.
“Wal-Mart’s always a competitor,” he said, adding that the superstore carries many of the same products. He said he is confident Valley Pawn will be able to beat the retail giant because they can almost always offer lower prices because their goods are second-hand.
Until Davis hires more pawnbrokers, employees from the Staunton location will commute to Lexington to serve the store. Eventually, Davis hopes to hire four pawnbrokers and a manager to operate the Lexington Valley Pawn. He said some of these employees may switch over from the Staunton store.
Amy Wimer is one of the pawnbrokers making the commute from Staunton. So far, Wimer said, business has been good and the store has seen some repeat customers.
Matching inventory with consumer preferences in the area is one of Valley Pawn’s biggest early challenges.
Initially, a significant portion of the store’s inventory will come from the Staunton location, and goods will flow back and forth on each week as the store figures out what goods Lexington residents want.
The Staunton store carries a variety of goods, including guitars, hardware, and even a restored Ducati motorcycle.
Valley Pawn will also build inventory through people who come into the store and want to sell their used goods. The pawnbrokers in the store will evaluate what is brought in and offer what they believe is a fair price for the goods based on price comparisons.
Traditionally, pawnbrokers have relied on their expertise to price the goods, but technology has helped make the process easier. Davis said Valley Pawn uses software that analyzes purchases and sales from pawn stores nationwide to determine a fair price for a specific good.
In the first week of operation, Wimer said tools seemed to be the most popular type of good sold at the Lexington location.
The Lexington pawnshop will also repair iPhones, a service Wimer thinks will be popular among students at Washington and Lee University and the Virginia Military Institute.
Both Davis and Wimer emphasized the importance of local relationships in creating a successful pawnshop. “People come [to the store] because of the employees,” Wimer said.
If business is good in Lexington, Davis plans to expand the location’s showroom and may even incorporate a vape shop. He also said he plans to open more locations in the Shenandoah Valley within the next five years.