The National Retail Federation, which calls itself the world’s largest retailer trade organization, and the Retail Industry Leaders Association, made up of 200 mostly large retail chains, have called off their planned merger. The two trade groups, both based in the Washington, DC, area, had announced in April they planned to merge this summer.

The decision not to go ahead with the merger is good news for smaller, online-only retailers, says Pinny Gniwisch, chief marketing officer at online jewelry retailer Ice.com Inc., No. 166 in the Internet Retailer Top 500 Guide, and a member of the board of NRF’s e-retail arm, Shop.org. RILA represents the Wal-Marts, the big, big brands out there, he says. Their focus on Capitol Hill and in general is different than that of smaller players.

Gniwisch and several other sources said they did not know why the two groups ended their merger talks, and the NRF and RILA offered no explanation. The boards of the two organizations issued a joint statement saying, Following a deliberative process, RILA and NRF have ended discussions aimed at merging the two organizations. NRF and RILA will devote all resources to continuing the work they are each doing to address the serious issues that America’s consumers and retailers are facing in today’s economic environment.

Since the merger announcement in April industry insiders have speculated that the combination was aimed at drawing big-box retailers into playing a bigger role in the NRF. The RILA was originally called the Mass Retailing Institute when it was launched by Wal-Mart Stores Inc. founder Sam Walton in 1969 as an alternative to the NRF, and over the years took on other names, including the International Mass Retail Association. Its board today is made up of executives of such major chains as Wal-Mart, Home Depot, Walgreen, Lowe’s, PetSmart and Petco.

In her letter to NRF members today, NRF president and CEO Tracy Mullin alluded to NRF’s broader constituency when she said, NRF will continue to serve as the association that represents the entire retail industry-from the largest retailers in the world to the smallest.

Mullin, who said in April that she planned to retire by the end of the year after helping the two groups combine, said in her letter today that my retirement has been put on hold. Her announcement suggested there would be no struggle over who would lead the new entity. Had the merger gone through, it had been expected the combined organization would have been headed by Sandy Kennedy, who has been RILA president since 2002 after serving as an NRF executive from 1993-2000 and then spending two years with consulting firm Accenture.

The end of the merger talks came as a surprise to one retail industry executive, who asked not to be named. He said he understood the merger was going through, and speculates it might have been derailed by disagreement over which organization’s executives would lead the lobbying effort or over financial matters. Each group operates its own conferences, notably the NRF’s Big Show in New York each January, which has attracted upwards of 17,000 attendees. The NRF has a budget of about $35 million, and RILA of about $9 million.