Taking its brand to the Max
Published by Daily Herald, November 27, 2011
Los Angeles was never supposed to be a testing ground for a new kind of retail venture, but that's the way things worked out for Midwest Gold Buyers.
The parent company of Cash for Gold retail stores that opened in the Chicago area three years ago went to the West Coast to expand its brand, changing the name in that area to GoldMax.
Quickly, though, owner Jordan Sadoff said, the company realized it needed to do things differently in Los Angeles than it did in the Midwest.
"We started with the name GoldMax out in Los Angeles, and we found the public there was much more finnicky about appearances," Sadoff said. "Having an average-looking store was not enough. The public spoke, and we listened. We went with very high-end stores out there and it worked phenomenally. It had a tremendous enhancement to our business to have a great name, an amazing looking store, and the overall concept and package.
"It worked so well in Los Angeles, we said, imagine how well it would work in Chicago, Atlanta, Tampa, and everywhere else we wanted to be?"
Thus came the changeover for Midwest Gold Buyers. The company has changed the store names in the Chicago area to GoldMax. That includes county locations in Algonquin, Crystal Lake, and McHenry.
It has put current stores through a refreshing to update their design and appeal to more upscale buyers. And it is set to expand, planning 20 additional stores in the Chicago area after the New Year, including a site in Woodstock at 355 S. Eastwood Drive.
"You see it in people's faces and reactions immediately when people walk into the newly designed stores, or see the ads with [company spokesman] Robin Leach," Sadoff said. "When we get 100 people in the course of a few days that notice and mention something, you know you've done something."
It's an unusual twist for the company, which launched three years ago at the beginning of the recession, with gold prices hovering around $900 an ounce, and customers looking for additional cash to pay bills and make ends meet.
Today, with gold prices nearly double that level at just below $1,800 an ounce, it's not the lower-end customer that is bringing growth and expansion to the chain, but the higher-end consumer.
"We didn't really know what type of customer base we'd attract, but what we've realized is that more and more of our customers over time because customers that were not desperate at all," Sadoff said. "So many of them now are middle class, upper middle class, and wealthy customers. It's socially acceptable. They're rather get the cash and take a trip, buy new shoes, or a Gucci purse than have that stuff sitting in an old jewelry box."
Because the type of customer coming into the stores was changing, Sadoff said the company needed to think about changing itself, too. That started by looking at a new name.
"We realized that with all the copycat Cash for Gold stores out there, we needed to make sure that we stood apart from the competition," he said. "We felt that we're different from the average cash for gold store, the average pawn shop, the average jeweler."
That meant consolidating the company under the GoldMax name and using its leverage as a national brand to build trust within its customer base, Sadoff said.
"So we're creating a national brand that shows off this high level of integrity, the beauty of the store, and the simplicity of our process," he said. "Integrity is a very big part of it. By showing we are a national brand, a national chain, and not an individual one-off store, it makes a big difference. People know the name is trusted throughout the country, and it's not a single, standalone store where you're worried it's here today and gone tomorrow."
Behind all of the changes, though, has been the rising gold prices. The ability of customers rich and poor to access large amounts of money through their old gold items has been among the drivers for expansion. The 20 new stores in the Chicago area will bring more than 50 new jobs with them.
"It's hard to say what the landscape would be if gold was half the price it is, but the public has been very apt to sell gold, as much as they are approving our concept," he said. "The concept worked [three years ago], and now that the price is as high as it is, it's led toward opening many stores. The prices are so high it warrants us having stores in every single neighborhood rather than having a couple around Chicago that people would go to. Everyone in Chicago is turning in their unwanted gold and getting good money for it at very high prices. That's enabled us to open so many stores."
It's also enabled the company to attract Leach as its spokesman in advertising, a move that Sadoff said has been important to building the company's brand as any other.
"Robin is a phenomenal guy, a very, very charitable guy," Sadoff said. "He donates a tremendous amount … to help fund research for Alzheimer's. He's so unbelievably giving that in turn, we've ended up supporting that organization.
"This guy, he does this promotion not because he needs to, he promotes us because he believes in the company he works with and sponsoring this charity of his."