Amid the gloom descending on brick-and-mortar retailing, Singapore’s largest pawnbroker and luxury goods reseller has opened its first retail store on Melbourne’s Swanston Street with plans to open up half a dozen more on the east coast.
Maxi-Cash, a listed Singaporean company that comes under the umbrella of developer Aspial Corporation, will officially open its first Australian shop opposite the Melbourne Town Hall on Wednesday.
The retailer has leased a 100 square metre store on a long-term lease on the ground floor of the historic Capital Arcade Building and hopes the high-profile location will be a good advertisement for its rather unique business.
“Melbourne is a very lovely city with great potential,” said Maxi-Cash CEO Ng Leok Cheng, who has chosen the Victorian capital for the company’s first Australian store.
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Displayed around Mr Cheng are ”pre-loved” Rolex watches, Gucci and Louis Vuitton bags, Mont Blanc pens and other leather goods – all in mint condition.
A corner of the store houses a pawnbroking counter – when The Australian Financial Review visited a woman was having her designer handbag carefully assessed by one of the shop attendants.
Established in 2008, the business now comprises 47 retail outlets – most of them in Singapore – turning over more than $200 million a year.
With plans to open five or six stores over the next few years, including in Sydney and possibly Brisbane, Mr Cheng said Maxi-Cash was able to perform well in a “very competitive” retail market by offering both “buy and sell” services.
“We get maximum leverage out of retail space and our staff are trained to sell [luxury goods] as well as value and maintain [pawned] items,” he said.
Alongside pawnbroking services, each store sells its own range of gold and diamond jewellery as well as pre-owned leather products, luxury watches and high-quality gold jewellery and gold items.
With only about 2 per cent of pawned items not redeemed by their owners, the retailer does not rely on that channel to stock its shops, but instead relies on second-hand markets for its mostly-one-off product ranges.
Pawnbroking, which offers short-term loans in exchange for goods held as security, is a massive trillion-dollar industry in Asia.
However, it’s relatively small in Australia with research house IBISWorld estimating annual revenues of $615 million and profits of almost $112 million – almost half of which flows to dominant player Cash Converters.
Despite its rather uninspiring name, Maxi-Cash will target a different market, those looking to pawn luxury goods such as gold, high-end jewellery, luxury watches and handbags.
The retailer has also established strong ties to Melbourne through its property connections, with another string in its bow being secured lending to property developers.
Maxi-Cash has provided financing to prominent private developer Caydon’s Mason Square development in Moonee Ponds, among a number of projects.
“We provide first mortgages and mezzanine loans of between $5 million and $15 million,” Mr Cheng said.
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