All in the familia
Pawnship courts hispanics and covets Blockbuster-vacated spaces
Beth Karlin / Shopping Centers Today
John Thedford wants to make pawnshops fashionable. Forget those seedy, caged storefronts manned by heartless lenders, as seen on TV or in the movies. Imagine instead a brightly lit, 8,000-square-foot store that stresses customer service. Better yet, when in Florida or Puerto Rico, visit one — or eight, actually. If Thedford has his way, there will be 20 La Familia Casa de Empeño y Joyeria stores in Florida and Puerto Rico by year-end, and twice that many by the end of next year. The ultimate goal is 150 in total, mostly in the Southeastern U.S. and the Caribbean.
Hispanics have been the predominant patrons, so hence the Spanish moniker, but Thedford says he expects the trend for bargain shopping, if not for instant loans, will gain popularity with other groups as well. “We are seeing customers we have never seen before,” he said. “It’s cool to be a bargain hunter these days.”
All of this may interest retail real estate owners seeking concepts to replace shuttered anchors. La Familia has already taken over three Blockbuster spaces and one Montgomery Ward. Three La Familia stores are in shopping centers anchored by a Publix supermarket, and one is in a Winn-Dixie-anchored center.
The first mainland store opened last year inside a 6,500-square-foot former Blockbuster in Orlando, Fla. Thedford says he generally pays about $15 to $20 per square foot for a Blockbuster space. This is roughly on par with Florida open-air center prices, but it is low for the centers where the Blockbuster stores are usually located, says Chris Macke, a senior retail real estate strategist at CoStar Group. “Blockbuster went into higher-quality, better-located centers having higher average rents,” said Macke. “Further, the suites that Blockbuster would have occupied in those centers would have been the better-to-best locations, usually an end cap or out in front of the center itself.”
Negotiations are tough, even for vacant slots, Thedford says. “It takes a while for everyone to come to reality,” he said. And Puerto Rico negotiations, he says, are even tougher. “They are like New York City prices. It’s not unusual to start at $30 to $35 a square foot.”
What may be even trickier is to get landlords to quit thinking of pawn businesses as purveyors of stolen goods and frequented by dodgy characters. “There are stereotypes that in the long run might damage a shopping center’s reputation,” said Macke. “It all comes down to whether the shopping center landlord has an alternative prospect for the vacant Blockbuster.” And the leasing perspective is one thing, but the investment perspective is something else again, says consultant Jeff Green, who heads Phoenix-based Jeff Green Partners. “Those New York types probably wouldn’t be impressed with a pawn shop on a property they were looking at,” Green said.
But times are changing, says Andy Hawkins, senior vice president of real estate brokerage services at Florida-based CNL Commercial Real Estate, which is helping Thedford find space. Hawkins says that over the past three years or so, landlords have become more receptive to uses they would have rejected at one time. And as for overcoming landlord skepticism, there is precedent, he points out.
“Ten years ago there wasn’t a landlord in the world that would have touched Dollar Tree,” he said. “But then they moved into class-A centers and brightened up their stores. Now they are the darlings of the industry.”
Thedford says several factors are at work to help change the unfortunate gangster image of pawnshops. The popularity of Pawn Stars, a reality TV show that draws an economically diverse audience, is making pawnshops fashionable. And celebrity cameos help polish the image, though the show does not really provide an accurate view of the day-to-day reality of a pawnshop, Thedford says.
He debunks the den-of-thieves myth, explaining that lenders’ license numbers and thumbprints are recorded and that the police review serial numbers and check stock lists for property that may be stolen. In the very rare event that an item does register as stolen — less than 0.2 percent of pawnshop transactions involve stolen property, Thedford says — the store will simply return the item to its owner, at no charge.
There are other pawnshop facts that help defy the stereotype. About 40 percent of Americans lack any sort of relationship with a bank, and for these people, pawnshops may afford the only means of borrowing. Even so, better than 80 percent of pawnshop loans, which average about $165 each, get repaid.
La Familia carries no firearms, and its stores follow mainstream retail design. Most important, Thedford says in his book, Smart Moves Management: Cultivating World-Class People and Profits, is cultivating world-class employees and paying them well. Thedford seems to practice what he preaches, too. When he formed his new company, he hired back the entire management team and several employees from the former company, Value Pawn & Jewelry. Thedford says his reputation for managing clean, successful shops at that previous business helped him earn his way into coveted Publix centers.
Todd Peterson, one of those Value Pawn employees Thedford brought back to rejoin him, was eager to become the Orlando store manager, and soon he will be overseeing five stores. “Most employees gravitate to Thedford like soldiers to a general,” Peterson said. “I would run through a brick wall for him. He’s all about bettering people.”
And yet loyalty alone is hardly enough to guarantee survival. Money talks too. Hawkins, for one, is confident that Thedford and La Familia co-founder Woody Whitcomb, who was also co-founder and CFO of Value Pawn, have the savvy and financial backing to make things work. Thedford says that he, Whitcomb and private equity group he did not name have invested $20 million.
Hawkins has done the due diligence and is confident the plans will work, citing again his Dollar Tree comparison. “Dollar Tree figured out the secret sauce for the dollar industry,” he said. “Thedford has done that for the pawn business.”