Consumer confidence took a hit to begin March, but by the end of the month sentiment had increased, which could be a good sign for retailers in the near future.
With consumers feeling better about their situations, retail spending could pickup. With that said, small- to medium-sized retailers might have the need to replenish their inventory. Generally, companies of this size can struggle to obtain financing from a bank, but inventory financing could still make this possible.
According to the Thomson Reuters/University of Michigan surveys of consumers, confidence jumped to end March. The Index of Consumer Sentiment increased to 78.6, a 1.3 percent month-to-month gain and 3.1 percent year-over-year improvement.
Both the Index of Consumer Expectations and Current Conditions Index increased as well, which means consumers are feeling better about their current situations and future prospects.
"Although confidence dipped in early March, since the middle of the month consumers have expressed improved prospects for economic growth," said Richard Curtin, Surveys of Consumers chief economist. "Two factors were responsible for the gains: consumers discounted the administration's warning about economic catastrophe following the cuts in federal spending, and consumers have renewed their expectations that job gains will accelerate in the months ahead."
Even though small- to medium-sized retailers may see an increase in sales, they might not have the available funds to replenish inventory on their own, as cash could be tied up in other areas. Should that be the case, inventory financing may be a viable option for these businesses.
This type of asset-based lending allows retailers to use their current inventory as collateral to obtain a revolving line of credit, which can be used to replenish their inventory and enable them to take advantage of opportunities for growth.