By Helen Reid
LONDON (Reuters) -Growing numbers of retailers and consumer brands are shifting their focus to Europe and other markets from the United States, as they expect U.S. tariffs to spark price hikes that will drive American consumer demand down.
European online fashion retailer Zalando, which sells logistics and software services to other retailers, said on Tuesday it was in talks with prospective new clients looking to expand in the European market.
“We see brands and retailers really having a larger focus on Europe as a way to also generate additional demand if it gets more difficult to do this in the U.S.,” Zalando co-CEO David Schroeder said.
U.S. President Donald Trump’s administration has slapped a blanket 10% tariff on all imports into the country, and 145% tariffs on goods made in China.
German clothing brand Hugo Boss has rerouted China-manufactured products to other markets instead of the U.S., and said there was a “notable deterioration” in U.S. consumer spending in the first quarter due to growing uncertainty over the economy.
“We are currently taking a rather cautious stance regarding consumer behavior in the U.S.,” its CEO Daniel Grieder said on Tuesday as the company reported lower revenues compared to last year.
The reaction highlights the impact of Trump’s tariffs on the flow of consumer products around the globe, forcing companies to shake up long-established patterns of manufacturing and sales.
Key will be how U.S. consumers react to price increases as a result of tariffs.
Barbie maker Mattel on Monday pulled its annual guidance, saying there was too much uncertainty over consumer spending, and that tariffs would force it to raise prices in the U.S.
For its card game UNO, Mattel said it was shipping more China-manufactured games internationally to avoid U.S. tariffs on Chinese goods, while increasing production of UNO in India to serve U.S. customers.
The CEO of Italian fashion group OTB, which owns brands including Diesel, Jil Sander and Maison Margiela, said on Monday it would have to increase its prices in the U.S. by 8-9% to offset the impact of tariffs.
While European brands previously proudly advertised their sales to U.S. consumers, world leaders in spending on clothes and shoes, they have pivoted to trying to reassure investors they are not overly exposed.
The U.S. accounts for around 20% of German sportswear brand Adidas’ business, CEO Bjorn Gulden said last week in a results call, adding that “for 80% of our business these tariffs have no impact”.
“We believe we can currently gain more momentum in the other markets,” said Gulden. “We can kind of finance the losses… on margin in the U.S. by overachieving in the other markets.”
More focus on Europe will however increase competition among retailers, and may make it harder for brands to win over new customers. The tariffs have also triggered concerns in the region that low-value goods could be dumped on the market.
Cut-price online retailers Shein and Temu, whose main market is the U.S., have increased their advertising spend in Europe as they seek to mitigate the impact of the U.S. hiking tariffs on Chinese goods and removing a duty-free exemption for low-value e-commerce packages from China.
(Reporting by Helen Reid in London, Ozan Ergenay in Gdansk, Elisa Anzolin in Milan, Juveria Tabassum in Bangalore; Editing by Jan Harvey)
Comments