LONDON, May 6 — Growing numbers of retailers and consumer brands are shifting their focus to Europe and other markets from the United States, as they expect United States (US) tariffs to spark price hikes that will drive American consumer demand down.
On Tuesday, European online fashion retailer Zalando, which sells logistics and software services to other retailers, said 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 also to generate additional demand if it gets more difficult to do this in the US," said Zalando co-chief executive officer (CEO) David Schroeder.
US President Donald Trump's administration has slapped a blanket 10 per cent tariff on all imports into the country, and 145 per cent tariffs on goods made in China.
German clothing brand Hugo Boss has rerouted China-manufactured products to other markets instead of the US, and said there was a "notable deterioration" in US consumer spending in the first quarter due to growing uncertainty over the economy.
"We are currently taking a rather cautious stance regarding consumer behaviour in the US," its CEO Daniel Grieder said on Tuesday as the company reported lower revenues than 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.
The key will be how US consumers react to price increases as a result of tariffs.
Barbie maker Mattel pulled its annual guidance on Monday, saying there was too much uncertainty over consumer spending and that tariffs would force it to raise prices in the US.
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 US customers.
The CEO of Italian fashion group OTB, which owns brands including Diesel, Jil Sander, and Maison Margiela, said on Monday that to offset the impact of tariffs, it would have to increase its prices in the US by eight per cent to nine per cent.
While European brands previously proudly advertised their sales to US consumers, world leaders in spending on clothes and shoes, they have pivoted to trying to reassure investors they are not overly exposed.
In a results call last week, German sportswear brand Adidas' CEO Bjorn Gulden said that the US accounts for around 20 per cent of its business, and added that "for 80 per cent of our business these tariffs have no impact".
"We believe we can currently gain more momentum in the other markets. We can kind of finance the losses... on margin in the US by overachieving in the other markets," he said.
However, a greater focus on Europe will 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 US, have increased their advertising spend in Europe as they seek to mitigate the impact of the US hiking tariffs on Chinese goods and removing a duty-free exemption for low-value e-commerce packages from China.
— Reuters
