Maxi-Cash cashes in on greater attraction for gold

To have and to hold gold jewellery has become even more popular in recent months and Catalist-listed pawnbroking chain Maxi-Cash wants to cash in.

Customers can now choose from more than 20,000 designs of new 916 or 999 gold jewellery - with at least 91.6 per cent and 99.9 per cent of gold - at 40 Maxi-Cash stores, under its "LeGold" collection.

Chief executive Ng Leok Cheng told The Straits Times yesterday: "For the first phase, the company is looking at $10 million in terms of investments in the stocks and such."

Maxi-Cash is confident of the new business, given the more than doubling in sales of pre-owned jewellery in the last 12 months.

The first few stores to sell the new jewellery line have had "very encouraging" results "and that's why we decided to almost double what we'd originally wanted to bring in". The firm aims to ship in more items.

Maxi-Cash said revenue for the year ending Dec 31 last year was $121.1 million, a rise of $11.4 million from a year ago. The higher revenue was contributed by the pawnbroking business, and the retail and trading of the pre-owned jewellery and watches business.

There's a trend towards gold in a world of uncertainty, says Mr Ng. At Maxi-Cash's 40 stores, customers can now choose from more than 20,000 designs of new 916 or 999 gold jewellery under its "LeGold" collection.
There's a trend towards gold in a world of uncertainty, says Mr Ng. At Maxi-Cash's 40 stores, customers can now choose from more than 20,000 designs of new 916 or 999 gold jewellery under its "LeGold" collection. ST PHOTO: MARCUS TAN

"Over the years, we've managed to build up a pretty large pool of loyal customers, since our stores are spread out in different types of neighbourhoods and locations."

And the key thing that consumers want more of is value, said Mr Ng. "The success of pre-owned jewellery is its value, as there's no workmanship cost and no goods and services tax. Pawnshops also have the edge as their gold prices are the lowest."

Citing the weakening economy, he said "there's a trend towards gold in a world of uncertainty because people want value, no matter what you buy."

The "LeGold" collection was startted after the Registry of Pawnbrokers approved the sale of brand new jewellery, besides pre-owned products, in February this year.

Even though Maxi-Cash will have to tag on workmanship cost and GST for the new pieces, Mr Ng said its gold prices will be highly competitive. Depending on what a customer buys, the price of a new piece could be about 15 to 30 per cent less than what traditional jewellers or goldsmiths offer.

The plan is to also attract younger people, and those who have never bought pre-owned jewellery from pawnshops. "You need that so there'll be growth beyond the existing client base."

On top of that, Mr Ng hopes to let people know how the pawnbroking industry has become "an important part of the financial industry". He estimated that the number of pawnshops has grown over the past few years, from more than 100 to more than 200, and some $5.5 billion worth of loans have been given out.

One of the misconceptions is that they cater to low-income earners, noted Mr Ng. "People say if the economy is not doing well, pawning will do very well. That is not true. If you only cater to that group, the business will never grow. There are people who are doing well, who need short-term loans or money for down payment for houses."

A version of this article appeared in the print edition of The Straits Times on August 05, 2016, with the headline 'Maxi-Cash cashes in on greater attraction for gold'. Print Edition | Subscribe