Some Industries Thrive During Tough Economy

Jeff Fuller hopes people take their gold teeth to him.

Fuller recently opened Arkansas Cash For Gold in Maumelle and will open one in Little Rock next month.

So far, Fuller said, he has paid about $10,000 to customers who have hauled gold pieces into the shop.

But he expects the payout to increase once the new location opens and he advertises more to people who want to unload their unused gold items.

“Everyone is concerned about the economy, even if you’re wealthy,” Fuller said. “Now is a good time to turn things into cash.”

While a number of industries are struggling in the recession, hard times are good times for some business strategies.

The nonprofit Goodwill Industries of Arkansas Inc. saw revenue at its 15 stores across Arkansas climb 9 percent between 2007 and 2008.

Credit Counseling of Arkansas Inc. also watched its revenue increase 6.8 percent from July 1, 2008, through Jan. 31, compared with the same seven-month period a year earlier, said Mike Robards, the executive director of the nonprofit in Fayetteville.

And Wal-Mart Stores Inc. of Bentonville had a 7.2 percent increase in sales to $401.2 billion for its fiscal year that ended Jan. 31, 2009, compared with the same period a year earlier.

“Those companies that are going to do well are those that are going to have a real value-oriented strategy,” said Kathy Deck, director of the Center for Business & Economic Research at the Sam M. Walton College of Business at the University of Arkansas. “They provide low prices for essential products.”

She said most consumers will trade down during a recession. So if they used to shop at a super-premium store, they will start to look for items at a premium store.

“You do see some retailers in better positions than others,” Deck said.

Collection Woes
One industry that has more work but isn’t raking in more revenue is the collection sector, said Emil Hartleb, executive director of the Commercial Collection Agency Association of Cedar Grove, N.J.

He said the collection companies that deal with business debts have seen their revenue remain flat or slightly decrease. “I think that will change over the next quarter or two because business bankruptcies are on the rise,” Hartleb said.

The unsecured debt becomes uncollectible if a business files for bankruptcy. “Then it won’t be good times anymore” for collection companies, Hartleb said. “It will be trying to handle an increasing volume of business with a lower collectibility, which means that your profit margins suffer.”

Collection companies are spending most of their time working out a payment arrangement with businesses, Hartleb said, “which increases your cost of collecting because you spend more time on a particular account … than you would have six or eight months ago.”

 

Gold Rush
Fuller said he thinks his company will be successful because of the economy. The price of gold has climbed from $300 an ounce just a few years ago to more than $900 an ounce today.

And people would like some easy money for items that can’t be used, such as the mate to a lost gold earring.  Fuller’s target customer is a woman in her 50s who has a jewelry case of gold items that are either out of style or broken.

By selling the items, the customer can use the money to buy more jewelry, Fuller said.

“Most of our customers don’t have to have the money,” he said.

The typical customer, though, will leave the store with $350, Fuller said.

Fuller’s family operates a cash-for-gold business in Dallas, and it sees between 75 and 90 customers a day and pays out about $25,000 a day.

He said the customers who turn to a pawn shop to avoid a personal economic crisis aren’t the ones who visit his shop. “Most people don’t walk in the door, pull their wedding ring off and say, ‘I need the money to buy some gas,'” Fuller said.

Those pawn shop customers have already sold the items that were of no use to them, he said.

The majority of the Arkansas Cash For Gold customers aren’t in financial trouble, he said.

Fuller has had experience in the cash-for-property business.

A few years ago, his real estate company, Agentonline Realty of Maumelle, would buy homes for cash. But that offer has been taken off the table.

“That market kind of changed,” Fuller said. “It’s so hard to borrow money. Banks wouldn’t offer just a blanket line of credit like they used to.”

And home values are difficult to estimate because of the declining values, he said.

Fuller still has his real estate company, which sells and builds homes.

Thrift Stores
The resale industry is doing well in the recession, said Adele Meyer, executive director of the National Association of Resale & Thrift Shops, in a March 2 news release.

“While other segments of retailing are cutting back on advertising and promotions and are trimming inventory and staff, resale professionals are taking the opposite approach,” Meyer said.

She said the strategy seems to be working.

Of the 185 NARTS members surveyed, 71.4 percent said sales increased in the fourth quarter of 2008 compared with the same period in 2007. The average increase in sales was about 30 percent, the news release said.

Goodwill Industries of Arkansas’ spokesman Maricel Johns said women’s clothes are the hot sellers at its stores. “That’s because more women’s items come through,” she said.

Sales in January and February are also up 9 percent from the same time in 2008. Sales might have been even higher, but people aren’t making as many donations, which would then be placed for sale, Johns said.

Debt Trouble
Credit Counseling of Arkansas has had more calls from people looking for financial guidance, said Joel Doelger, the director of counseling for the organization. “We have people coming to us in real hard times,” he said.

Credit Counseling offers services such as debt consolidation or budget management.

Under its debt elimination program, Credit Counseling will collect $199 from the client to pay off the debt, but keep $15 as its administrative fee.

Payments over $200 have a $20 monthly fee.

But if the client doesn’t have a job, there’s not a lot of budgeting or money to set aside to pay the bills, Doelger said.

“So they might be turning to bankruptcy in order to resolve a problem,” he said.

Credit Counseling also handles the pre-filing bankruptcy counseling sessions that were mandated by Congress as part of the Bankruptcy Reform Act in 2005.

Those counseling session were up 9 percent in 2008 to 3,208, he said.

The organization’s revenue was $959,204 between July 1, 2008, and Jan. 31, Robards said.

For its fiscal year that ended June 30, 2008, it reported revenue of $1.5 million.

Doelger said a number of people he sees were in the housing industry and then lost their job. Or they lost their overtime pay, which they banked on, and now find themselves in a hole, he said.

“They’re trying to pay back debt that was really built up under much better times,” Doelger said.

Hartleb, with the Commercial Collection Agency Association, said the collection companies that deal with consumers are running into problems too.

“They’re getting a lot of business, but a lot of business is turning out to be uncollectible,” he said.