Wednesday 30 September 2009
Aspial carving a niche in pawn broking
But for Singapore’s largest jewellery chain Aspial Corporation, all that glitters is more than gold, as the company looks to carve a niche in its pawn broking segment by taking in non-gold items such as diamonds and white gold. It sees the latter as relatively untapped segments.
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Aspial carving a niche in pawn broking
It wants to tap non-gold segments such as diamonds and white gold
By JAMIE LEE
29 September 2009
All that glitters is not gold, warned Shakespeare.
But for Singapore’s largest jewellery chain Aspial Corporation, all that glitters is more than gold, as the company looks to carve a niche in its pawn broking segment by taking in non-gold items such as diamonds and white gold. It sees the latter as relatively untapped segments.
It is also launching at least three more stores - known as Maxi-Cash - by November to bring its tally to 12 in a span of six months since returning to the pawn broking sector, said vice-president of financial services Leow Soon Guan.
These stores will be in the suburban areas such as Clementi and Woodlands. The company is looking to have a ‘balanced portfolio’ of pawnshops in these areas, as well as those closer to the city, such as Bugis and Lucky Plaza.
The increase in pawn broking business from the upcoming opening of the two casinos in Singapore is ‘quietly anticipated’, said Mr. Leow. But he added that it is unclear how substantial the business rise will be as the segment has to compete with other forms of money lending. The surge in lending is also unlikely to create a stream of pawnshops with neon signs being set up near casinos as seen in Macau.
Mr. Leow declined to share sales targets, but expects to break even in under three years.
Aspial - last known as Lee Hwa Holdings - exited the pawn broking business in the late 1990s to venture into property, but now sees potential in offering modern services and expanding the type of pawn items accepted.
‘The market can be bigger than what it is,’ said Mr. Leow, adding that about 95 per cent of pawn items are yellow gold held by the older customers. ‘The younger generation hold diamonds and white gold. These are untapped market segments.’ The company is seeing younger customers coming in, he added.
Contrary to intuition, the pawn broking industry doesn’t just grow during the bad times as customers pawn items to ‘make ends meet’, said Mr. Leow, because people who spend excessively during the good times will pawn items to manage their cash.
The group hopes to tap on its experience in the jewellery business to offer better valuations to customers. Mr. Leow said that traditional pawnshops may not be familiar with the prices of items such as diamonds and may quote poor prices.
And Aspial, which now owns the largest chain of pawnshops after SingPost and competing jeweller Soo Kee Group, believes it is offering the highest valuations in the market now.
‘We’re not shy to set the benchmark,’ said Mr. Leow, adding that the company does hedging against gold prices to manage the risk in price fluctuations.
‘Traditional shops are hesitant to offer higher prices. We dare to give (high prices) because we are managing our risks in a different way.’
But Mr. Leow also admits that while its pawn broking business is the largest in terms of store numbers, its loan base is still small compared to the larger players, many of whom have a loyal customer base, which explains the company’s marketing efforts through print and TV advertisements.
Its differential factor is in its modern feel. The pawnshop’s design mirrors that of a POSB branch, at which customers can interact with the staff easily.
This is a marked difference from the traditional shops with tiled walls and floors, and steel bars separating the pawnbroker and the customer.
Besides breaking down the traditional concept of pawn shops, Mr. Leow also hopes to toss behind the stigma of the trade.
‘It shouldn’t be looked down on. It’s just another financial service,’ he said.
‘It’s true that traditionally it serves a lot of the lower income people but right now, you see a wide spectrum of customers like businessmen who need to manage their cashflow.’
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