As the economy continues to improve, U.S. retailers have been seeing higher consumer confidence and spending, which could lead to a need for inventory financing for small- to medium-sized companies.
With spending increasing at retailers across the country, inventory levels are likely down. While larger companies often have the available capital to replace product on their own, the same can't be said for small retailers.
Generally, these companies have to rely on some sort of financing to keep their shelves stocked, and due to limited available capital, or slow cash flows, banks often turn them away. Fortunately, inventory financing is available to businesses turned away by those financial institutions.
According to Colliers International's 2013 Q1 North America Retail Highlights report, retail spending has been on the rise as a result of recent job growth and an improving economy.
The housing market's recovery has also been bolstering spending, as new construction has been increasing, as well as the number of homes available for sale and the average price for a home.
All of these factors might have contributed to the unexpected rise in retail sales during April.
To help draw in consumers, retailers have been focusing on value, said Mark Keschi, national director of retail services for Colliers International.
"Today, value does not necessarily mean the cheapest price," he said. "The consumer is looking for quality, brand and price transparency in a dynamic shopping environment. Shoppers also want the ability to purchase the product in the manner that best suits their lifestyle, whether it is in a brick-and-mortar location or online."
Small- to medium-sized retailers that do run into the need to replenish inventory could benefit greatly from inventory financing. It allows them to obtain a revolving line of credit using current product, which can be used to help keep shelves stocked.