Just like the greater economy as a whole, retail is suffering from the current financial crisis.  After yesterday’s record drop, the S&P Retail index improved slightly, gaining 12 points.  Monday, the index dropped 6.7% after the House of Representatives failed to pass the bailout bill. (WWD, subscription required).

It’s going to continue to be a sticky road for retail for the next few months (or longer), I fear.  Concerned and cash-strapped consumers aren’t helping to push up the bottom line, either.

If the financial woes continue, and the U.S. Government can’t push some sort of aid package, then retail will really be hurt. The lack of available cash for credit companies may cause consumers’ credit lines to be shortened. If that happens, unless consumers have cash to pay for purchases, the “buy now, pay later” approach won’t work, because buyers will not have credit. No credit is a problem for retailers who depend on shoppers swiping to buy non-necessity items.

It could get very ugly for retail.