German affordable textiles chain, Kik, has halted its plans to enter the United States due to the threat of higher tariffs. Instead of taking the tariff risk, the company wants to focus on expansion in Europe.
Kik aimed to conquer the U.S. by opening its first ten stores in the Midwest during 2019. The U.S. market offers unlimited growth potential, Patrick Zahn, chief executive officer of Kik, said last year. Now, however, trade policies of President Trump have thwarted the plans of the chain, that hoped to emulate the success of German grocery retailer Aldi in the U.S..
“Entering the U.S. would be a big risk for us due to the difficult international climate and the threat of a trade war between the U.S. and China, as well as between the U.S. and Europe,” said Zahn, chief executive office of Kik in an interview with German newspaper Handelsblatt on Wednesday.
In contrast to the difficulties felt by traditional retailers, Kik and fellow discount chains have grown in Germany over the past years. The Boenen,Germany-based company, operates more than 3,500 stores in Europe, which all offer a very similar range of low-priced clothing and home textiles, thus enabling the retailer to realize low buying prices. Facing possible tariff costs, this strategy might not work in the United States anymore.
“The looming tariffs would hit us in full and almost completely offset the advantages that we have in procurement,” Zahn told Handelsblatt.
Rather than targeting the U.S., Kik will focus on European countries, such as Romania, France and Belgium, to reach its target of 5000 stores in the coming years.