The economic turmoil affecting the financial markets has begun to hit the retail sector, and a local expert believes it's going to get worse for retailers in the coming weeks.

Professor Jayashankar Swaminathan of UNC's Kenan-Flager School of Business said there's considerable lag time between the credit freeze in the financial markets and the world of retail.

"Most retail operates on a 30 to 60 day credit business," he said. That means businesses will be hurt by the current credit freeze at the height of what should be the most profitable retail selling season for merchants.

Retailers are already worried about consumers.

"Fewer numbers of people are going to go to the malls," said professor Swaminathan.

Meanwhile, consumers are worried about expenses.

"I'm only going to buy what I have to buy," said consumer Heidi Blake.

"We're scaling back," consumer James Jefferies agreed. "I'll spend less this year that last year."

If you go to the malls right now, you still see lots of people buying. Professor Swaminathan believes most are using their credit cards.

"The crunch has yet to hit the cards," he explained. "But when it does, it'll be a big blow to retail."

He said the financial situation hit so fast, retailers had little time to react. As a result, stores will have lots of inventory and not enough buyers.

"I believe there'll be lots of mismatch between demand and supply," said Professor Swaminathan. "That means they'll be lots of good bargains out there in a few weeks."

Some consumers are looking forward to the deals.

"I'm looking for sales and bargains," said Heidi Blake. "I'll start shopping earlier and spread it out over next few months."

TALK BACK TO STEVE ON HIS BLOG.

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