Aaron Rents plans to add several stores in Baltimore

April 22, 1994|By Joel Obermayer | Joel Obermayer,Sun Staff Writer

National rent-to-own chain Aaron Rents Inc. is planning a major expansion in the Baltimore area which could create more than a dozen new rent-to-own superstores over the next two years.

Rent-to-own stores carry everything from appliances and electronics to furniture. Customers may elect to rent a product for a monthly fee, but typically can buy it if they make those payments for a year.

The rent-to-own industry has come under heavy criticism from government officials and public interest groups for targeting low-income customers, charging them exorbitant prices and using misleading sales tactics.

But Charles Loudermilk, chairman and chief executive officer of Aaron Rents, said yesterday that rent-to-own is just a new way of getting merchandise to Americans on the bottom 35 percent of the economic scale.

"These are people that don't have credit cards or checking accounts, but they need the basic necessities of life," he said.

Aaron Rents had sales of $180 million for the 12 months ended March 31. The Atlanta-based firm operates 200 stores in 20 states and has three stores in the Baltimore area.

Mr. Loudermilk was in Baltimore yesterday to drum up investors for a $20 million secondary stock offering the company will use to pay off debt and finance its national expansion.

Mr. Loudermilk said virtually all the expansion will be rent-to-own superstores in areas where the company already does business. For example, in Baltimore the firm plans to increase the number of its stores by between 15 and 20 within the next two to three years.

The typical unit will have about 15,000 square feet, significantly larger than the 3,000-square-foot store that is average for the industry, he said.

The company expects the superstore concept will allow it to reach a wide market by stocking more brands of appliances and styles of furniture than its competitors, he said.

"We feel that only 30 percent of the rent-to-own market has been tapped nationwide," Mr. Loudermilk said.

In a nationwide study released last month, the Washington-basedpublic interest group USPIRG maintained that rent-to-own stores on average charge their customers 111 percent annual interest, far more than normal retail stores. The study also faulted rent-to-own stores for concealing high prices by only advertising monthly rates and for using overly aggressive sales tactics.

Bill Wood, who coordinated the national study for USPIRG, said Aaron Rents' practices are no different than the rest in the industry.

"They're no better than the average rent-to-own store. Their rates are five times or more what a typical credit card transaction would cost," he said. "Definitely a bad deal."

But Mr. Loudermilk said that while the industry may have a poor reputation, Aaron Rents has remained clear of any abuses. He said his stores' prices are higher than other retailers because of the extra services they provide, like free delivery and pick up. He said he supports legislation pending in Congress that would force full price disclosure and standardize ethics for collecting when customers can't pay.

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