NEW YORK — A possible slowdown in consumer spending during the holiday season could force shoppers to pass up supermarkets in favor of discounters on some items, Moody’s Investor Service said in a report issued here yesterday. However, sales of high-margin generic goods might temper the losses for grocers, the report pointed out. According to the report, which covered a range of retaining in several industries, “The coming holiday season will be the next big test for retailers because of the need to finance the buildup of inventory and the risk that cash flow will be weaker than expected if consumers reduce spending during the holidays. An extended economic slowdown could push down sales and operating cash flow to the point that some retailers might run out of cash, thus creating a need for re-financing on its own. Equally worrisome, their suppliers, from food distributors to clothing manufacturers, could lose confidence in certain retail customers and tighten terms, even moving to cash on delivery. Alternatively, the suppliers might seek to tighten terms because they too were experiencing an inability to access external funding.”
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