Cash America 2010 Annual Report Download - page 40

11
Competition
Pawn Lending Activities
The Company has many competitors to its pawn lending activities, such as retailers of new merchandise,
retailers of pre-owned merchandise, thrift shops, internet retailers, internet auction sites and other pawn shops. The
pawnshop industry in the United States remains very fragmented, with an estimated 11,000 to 15,000 stores
nationwide operating in 2010 that were owned primarily by independent operators and, to a lesser extent, by publicly-
traded companies. The Company believes that it is the largest operator of pawnshops in the world. The three largest
publicly-traded pawnshop companies (including our Company) operated approximately 1,000 total pawnshops in the
United States in 2010. During 2010, the Company was the largest publicly-traded pawnshop operator in the United
States. Management continues to believe that this high fragmentation of the pawn industry is due in part to the lack of
qualified management, lack of adequate financial controls and reporting systems, and the lack of financial resources.
Management believes that the Company can achieve economies of scale and increased operating efficiencies by
increasing the number of stores under operation and utilizing modern point-of-sale systems and proven operating
methods. Management believes that the principal competitive factors in the pawnshop industry are location, quality
customer service, and the ability to loan competitive amounts at competitive rates.
The pawnshop industry in Mexico is still in the expansion stage, and remains substantially less developed than
it is in the United States. In addition, the industry is fragmented, but less so than in the United States. There has been
significant growth in the number of pawnshops servicing Mexico over the last several years to an estimated 4,500
licensed locations operating in 2010. These locations are owned by independent operators and chains, including some
owned by not-for-profit organizations and publicly-traded companies. A large percentage of the population in Mexico
is unbanked (or do not have a relationship with a bank) or underbanked (or have limited access to banking or other
financial services) and has limited access to consumer credit. The Company anticipates significant opportunity for
growth in the number of locations in Mexico due to the large number of potential customers underserved through
traditional credit providers and the limited number of large pawnshop operators in the country.
Consumer Loan Activities
The Company offers consumer loans through many of its retail services locations and over the internet.
According to the Community Financial Services Association, industry analysts estimate that there are approximately
21,000 consumer loan storefront locations across the United States. While the consumer loan industry grew
significantly during the 1990’s into the early 2000’s with the addition of new storefront locations, the storefront growth
has begun to contract in the past few years. This is due in part to changes in laws and regulations governing consumer
loans in various states. As a result, management believes that opportunities in the United States for growth are limited
at the storefront level and has elected to concentrate its efforts on the online lending channel for growth in its consumer
loan business both in the United States and other foreign countries. While management believes that the Company is a
major provider in the distribution of the consumer loan product via the internet, it is difficult to determine exactly how
much of the market it provides since most other significant providers are privately held. Management believes that the
principal competitive factors in the consumer loan industry are customer service, convenience, customer acquisition,
location and regulatory compliance.
In addition to consumer loan lenders, the Company also competes with financial institutions, such as banks
and consumer finance companies, which generally lend on an unsecured as well as a secured basis. Other lenders may
and do lend money on terms more favorable than those offered by the Company.
Regulation
The Company’s operations are subject to extensive regulation, supervision and licensing under various federal,
state and local statutes, ordinances and regulations. (For a geographic breakdown of operating locations, see “Item 2.
Properties.”)