Pawnshops and payday-loan lenders have long been harbingers of hard economic times.
But across the country, requests to pawn items are down and sales are up, which goes against conventional wisdom.
In Victoria, pawn shops have seen almost no customers coming in with items to pawn and a surge in buyers in the past few months.
鈥淢y sales are through the roof,鈥� said Drew Layton, owner of Bay Street Broker. 鈥淏ut the shelves for pawns are down by about 75 per cent. I haven鈥檛 seen anything like this since 1998. It鈥檚 a little bit strange.鈥�
In three to five months鈥� time, he said, his retail shelves could be empty of items of value that customers have not redeemed.
He attributes the downturn in pawns to the glut of sa国际传媒 Emergency Response Benefit money to help those affected by COVID-19. The federal benefit provides people out of work due to the pandemic $500 a week for up to 16 weeks.
鈥淧eople who don鈥檛 need money don鈥檛 have to pawn their stuff,鈥� said Layton, who has been in operation for 25 years.
He said the payday-loan business has also been affected, although he is confident his business will 鈥渃ome back in spades鈥� in the near future as people start to pawn some of the items they purchased with their CERB cheques.
Doug Scott, owner of Esquimalt Trading, reports a similar situation, with requests to pawn items down at least 30% and sales doubling in the past few months.
鈥淲hile the sales end is good for the short term, pawns are our bread and butter and affects long-term profitability,鈥� said Scott, the second-generation operator of the 44-year-old company. 鈥淪till, I am not begrudging what the government has done.鈥�
He said that he is hurting for items for his shelves and anticipates it will be at least six months before the industry returns to normal.
In Calgary, John Sanford has been a pawnbroker for 20 years and said he has never seen anything like it.
鈥淚 rushed to the bank before this happened and I got all kinds of cash ready. I thought it was going to be a bonanza. But nope. Absolutely not,鈥� said Sanford, co-owner of Rocky Mountain Pawn in Calgary.
鈥淚t was amazing how much stuff we got after 2015 when the oil went in the tank. We had lots of stuff. And now we have nothing.鈥�
Pawnshops lend people money and typically give them 30 days to come back, repay the loan and retrieve their items. Sanford said about eight out of every 10 customers usually come back.
Sanford on average sees 15 to 30 pawns daily, but on a day last week, he鈥檇 only had one by mid-afternoon.
鈥淔rom the people we鈥檝e talked to and who have come in, the economy鈥檚 awash with free money. There鈥檚 some people bragging how much they鈥檙e getting on CERB,鈥� he said.
On the bright side, Sanford said, items that have been sitting in storage for years have been sold. Gold rings, chains, Rolex watches, TVs, video-game consoles and stereos flew off the shelves early in the health crisis. Guitars have also been popular.
But with supplies disappearing and nobody pawning items, Sanford predicts a reckoning is coming soon.
鈥淎s far as pawns go, this is going to be the worst month since 1982 for lending out money. Thirty days from now, we won鈥檛 even make enough money to pay our rent.鈥�
The co-owner of Halifax Buy and Sell said business has also been slow.
鈥淚t鈥檚 really strange,鈥� said Robert Blotnicky.
鈥淟iterally everybody coming through the store is looking to spend money from their CERB cheques and trying to buy things to secure their needs.鈥�
People also rushed in to pay to get their pawned items back.
鈥淎t this point, our pawn shelves are very bare.鈥�
The payday-loan industry is also struggling, said Alan Evetts, a director of the Canadian Consumer Finance Association and an owner of Mysa国际传媒Payday.com in Vancouver.
In the first six weeks of the pandemic, numbers across the industry were consistently down about 84 per cent from before the crisis, he said. 鈥淭hings changed radically. The demand has been completely decimated by COVID.
鈥淚 think there are a few factors driving it. Spending is down to a huge degree while people are at home. And life is cheaper when you don鈥檛 leave your house.鈥�
Evetts also blames high unemployment for the dropoff, since loans are dependent on customers having an upcoming payday to repay them.
