Magazine article Business Credit

Creditor Awareness Critical in Rocky Retail Sector

Magazine article Business Credit

Creditor Awareness Critical in Rocky Retail Sector

Article excerpt

Traditional department stores and online shopping websites are going head-to-head in the retail sector. Although brick-and-mortar shops reached stability in nonpayments during the first six months of 2018, credit insurer Atradius reported a growing number of insolvencies among retail chains-a trend that is likely to continue the rest of the year.

The retail sector ended 2017 on a high note, having its best year since 2014, according to NACM Economist Chris Kuehl, Ph.D. The holiday shopping season boosted the spending period, Kuehl said, with support from Halloween and Black Friday sales; however, come January 2018, sales declined and fell even more in February.

Based on data from the U.S. Department of Commerce and Wells Fargo Securities, Wells Fargo Economists Eugenio Alemán and Charlie Dougherty released a report in March that revealed a 0.1% drop in February's retail sales, falling short of the 0.3% predicted increase. Among the affected sales, listed from the most-to-least impacted, were motor vehicle and parts dealers, furniture and home furnishing stores, electronics and appliance stores, health and personal care stores as well as general merchandise. Sales for building material, clothing accessories and miscellaneous store retailers were up from January.

The Atradius report, released in April, suggested that furniture and electronics sales will increase over the next few years. Retailers' dependence on bank financing as well as overall indebtedness remained high since April, while banks willingness to extend credit was low. …

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