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Credit Crunch Also Major Threat To Retail

10/13/2008 02:00:00 AM Eastern

New York — A cutback in consumer spending isn’t the only consequence retailer face as a result of the roiling financial markets.

Observers fear that a tightening of credit by banks and other lenders could strangle independent retailers, allowing larger, better-financed chains to siphon off market share.

"It’s too early to quantify whether or not the economic crisis has affected business credit availability or the borrowing process," observed Robert Weisner, executive VP of the Nationwide Marketing Group. "However, if the trend continues, this will ultimately hurt the independent dealer."

Weisner said Nationwide is encouraging its members to contact Congress in order to send "a clear message that banking regulations should be modified in order for the independent dealer to continue to operate and prosper in this present environment."

While NATM Buying Corp. isn’t involved in member’s credit issues, group president and executive director Bill Trawick acknowledged that "the ability to borrow is difficult right now. If you can get financing, the interest rates are expensive. I’m on the board of Conn’s [a member of NATM] and luckily it got its financing a month ago."

Michael Lasser, a hardlines analyst for Barclay’s Capital, said in a research note that while most major chains shouldn’t have a problem accessing sufficient capital to fund their operations, the credit crunch could impact smaller, undercapitalized retailers, who stand to lose further market share.

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