By Mike Backenroth
While the debt ceiling talks are over for now, the next default risk is said to be due as early as March 2014, which means retailers need to be prepared to face issues with their vendors sooner rather than later. The recent government shutdown and debt ceiling issues have already left consumers with shaken confidence heading into the 2013 holiday season.
While most manufacturers have already shipped holiday goods to their retail customers, there is a sense of fear that retailers will now have issues moving or selling this merchandise as the recent government activity could cause an uncertainty which may lead to consumers tightening their purse strings. This could force retailers to need to offer markdowns, discounts and allowances they were not planning on offering originally, which ultimately flows back to the vendors.
My best advice to any manufacturer or retailer who fears negative repercussions from both the debt ceiling issue as well as the recent government shutdown would be to be prepared. If you have these fears, now is the time to face them, not later when you are not getting paid. Work with your lender and overseas suppliers to ensure you have reserved a cushion to help absorb the possible blow for any backlash from this recent government activity.