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Retail's 'survival of the fittest' will cull the weak, Moody's says

May 10, 2019 / Ben Unglesbee

Competitive pressures and financial instability are thinning out the retail herd while larger, healthier companies are poised to grab market share. That's the premise of a new report from Moody's shared with Retail Dive. Analysts, led by Moody's vice president and senior credit officer Manoj Chadha, described a "survival of the fittest" in retail that could ultimately lead to a healthier sector. They expect competitive pressures to increase, with stronger retailers that have healthy balance sheets able to chip away at their weaker rivals by lowering prices and ramping up their e-commerce operations.In the first quarter of the year, the ratings agency downgraded seven retailers. Of those, six of the retailers were rated B3 or lower and were "more susceptible to downgrades" due to poor liquidity, high debt levels, competitive disadvantages, operational problems or some combination of those, the analysts wrote.