Looking further ahead: The Fed has made clear that it will continue to aggressively hike interest rates to combat rising inflation. That will make borrowing costs higher, which may lead some consumers to be reluctant to use their credit cards.
- Rising borrowing costs are also causing companies to pull back on investments. That helps explain why the warehouse vacancy rate ticked up in Q3 (to 3.2% from 3.0% in Q2) for the first time in two years, per Cushman & Wakefield data reported in The Wall Street Journal.
The big takeaway: The strong labor market has helped retail sales keep pace with inflation. But if interest rates continue to rise, retailers will have no choice but to cut costs and focus on profitability.
- While it’s difficult to read too much into a modest increase in the warehouse vacancy rate, that one metric may be a sign some retailers are adopting a more conservative approach to fulfillment.
This article originally appeared in Insider Intelligence's Retail & Ecommerce Briefing—a daily recap of top stories reshaping the retail industry. Subscribe to have more hard-hitting takeaways delivered to your inbox daily.