Retail Credit Creates a Storm for the Supply Chain
A financial storm is brewing, this year over 800 retailers are projected to go out of business. Retail stock prices are collapsing and taking good credit ratings with them. The survivors will need to revamp their plans for inventory strategies, store locations and new logistics solutions to compete.
Large e-commerce competitors and rising customer expectations are forcing brick and mortar retailers and their 3PL providers to redesign their market strategy.
New supply chain plans are critical to the survival of retailers and everyone involved in the supply chain. There is a growing need for agile warehouse software, automation, and other solutions to help meet these new challenges. These improvements come with a large price tag. The same retailers that are experiencing declining sales have to face the fact that the only way out is to spent more money on mission critical projects. New equipment, software, improvements for omni-channel distribution, cross dock, e-commerce, and 3PL are needed to compete. Do to the declining market for traditional brick and mortar retailers, funding of these projects requires new strategies to prevent a financial crisis for the retailer.
Historically, CFOs fund projects with capital expenditure budgets that rely on the use of operating capital and existing lines of credit. CFO’s now seek to guard their existing bank credit by “keeping their power dry”. Fortunately, there are alternative funding products for these desperately needed projects. Leasing, capital leasing, and custom loans are valuable alternatives to meet these needs. Some of these products can be “off balance sheet” alternatives. Traditional banks find it hard to lend money for these types of projects. This is due to a lack of understanding the value of equipment and technology assets. New companies such as Logistics Capital Resources have entered the market to fill this need. LCR is staffed with experienced supply chain finance executives that understand the assets and can bridge the gap between the monetary need for the project and funding sources.
The explosive pace of business and technology will continue and the need for financial resources will expand. This financial credit storm is approaching and those with the resources will survive.