Benetton

Benetton, founded in 1965, and initially producing fine colorful knitwear, expanded to become the largest apparel network in the world. Benetton Group's diversification into a wide range of products and activities and its often controversial advertising techniques made the Benetton name a household word.

The Benetton clothing line was created by three brothers and their sister in a small knitting shop in Ponzano Veneto, Italy. When their father died, Luciano (born 1935) left school to work in a clothing store in order to support his mother, sister Giuliana, and younger brothers Gilberto and Carlo.

Luciano developed promotional and commercial expertise as a clerk in a textile store in Treviso. Later, as a representative of small textile establishments, he built up contacts with the Roman knitting magnates who were helpful when the family expanded its operation. As president of the Benetton Group, Luciano led the expansion of family holdings, particularly in the 1990s. He served as a senator of the Italian Republic from 1992 to 1994. Luciano is the father of four children, including Mauro Benetton, marketing director of the Benetton Group.

Giuliana Benetton (born 1937) gained her experience from ten years of handicraft work in knitting for women. She created new knitwear collections and oversaw product lines. Giuliana served on the board of directors of both Edizione Holding, the family owned financial holding company and Benetton Group. She is married and has four children.

Gilberto Benetton (born 1941), vice-president of the Benetton Group, president of Edizione Holding, and president of Benetton Sportsystem, also handled all Benetton sponsorships of athletic events. Through the Benetton Foundation, he created a sports complex in Treviso, Cittadella dello Sport, which was open to the public. Gilberto is married and has two children.

Carlo Benetton (born 1943) was involved with the manufacturing component of Benetton. He was responsible for production at headquarters and abroad. Carlo served as vice-president of Edizione Holding and was on the board of directors of the Benetton Group. He is the father of four children.

Mauro (born 1962), eldest son of Luciano, began working for the Benetton Group as a student and later managed a shop in Paris. In 1985 he moved to Benetton's headquarters in Ponzano, where he took charge of the relaunch of one of the Group's main lines, which then experienced a period of record growth. Mauro was appointed marketing director of the Benetton Group in 1992, at the age 30.

The Benetton family combined and optimized their expertise in marketing (Luciano), production (Giuliana), management and finance (Gilberto) and technical know-how (Carlo). They aimed at the casual wear market with color to catch the eye, first only in woolens but later in cotton. When regional small plants producing stockings came upon hard times, the Benettons bought their equipment at bargain prices. Now they were ready for a spectacular expansion. Between 1972 and 1976, they expanded into all types of clothing, from jeans to gloves to a complete Benetton wear model. Going into the 1990s there were 14 family members in the business.

The Benettons aimed to transform the fashion-fractionalized small handicraft style into an industry with minimum risks. To achieve this, they expanded in variety and size and decentralized production and distribution. They purchased large quantities of materials in raw form, benefiting from quantity discounts and controlling the processing (especially color) from its rawest form. However, 80 percent of production was performed in plants not owned by Benetton but controlled by the family. In distribution, various attempts were made to control all stores. At the beginning they would go into partnership with a friend who would in turn find others interested in having a Benetton store. Later, with international expansions, the holdings model was adopted, with the Benettons always having an exclusive contract. As a practical characteristic, the stores were about 400 square feet (while the competition was usually 1,500 square feet) and 50 percent of all working hours were dedicated to sales (the competition, 22.5 percent). This is probably why Benetton's productivity was four times greater than the competition.

Still, the success of the "Benetton" model is due to their trust. They wanted the stores to be exclusively Benetton, but allowed the owners to have 51 percent of the holdings. The Benettons have always preferred to be partners with their producers and distributors rather than to seek vertical integration (where the managers of stores were salaried people with no direct share in the operation). The incentive was to make every representative a majority partner in his particular operation so that, as owners, they would strive to increase sales and profits. In the 1980s, the little 400-square-feet stores developed a turnover more than twice as large as those of competing companies. Specialization and standardization are the main instruments that allow high productivity. The Benettons found a happy mixture of personal incentives: outright ownership by each unit and overriding control of operations and a quality/product mix to conduct market penetration at low risk with high profitability.

The family entered into other business ventures assisted by loans from financial institutions. They eventually purchased the large well-known shoe manufacturer, Varese. In time, they allowed larger store units, depending on the sales as calculated pieces per square foot.

The 1980s saw a decline in the number of shops in the United States, but expansion into other global markets. Benetton increased the number of stores in the Far East and boasted 50 stores in China alone. By 1996 Benetton's presence was felt in over 100 countries, with 7,000 sales outlets for their main brands of United Colors of Benetton, Sisley, and 012. The sales network included 80 branches and 800 staff responsible for independent stores in specific geographic areas. In 1996 the largest store opened for business in London, England. The Benetton magazine, Colors, was introduced, using multicultural messages the company had featured in its ad campaigns of the 1980s.

In addition to their clothing lines, Benetton diversified into a variety of other enterprises through Edizione Holding. Acquisitions included Rollerblade, Prince tennis rackets, Nordica ski boots, Kastle skis, and Asolo hiking boots. Benetton, along with partners, also acquired Euromercato, Italy's leading superstore chain and interests in GS-Autogrill markets and restaurants. Other product lines included watches, stationery, cosmetics, linens, eyewear, books, the Twingo Benetton car (in collaboration with Renault), and a line of pagers through an agreement with Motorola. By 1995 Benetton sponsored sports teams in volleyball, basketball, and rugby. Benetton team Formula One World championships include the 1994 and 1995 World Drivers' championship and the World Car Makers' championships.

In the 1990s Benetton came under criticism for its use of controversial images in its advertising campaigns, including those depicting war, AIDS, racism, violence, and homelessness. While Benetton was pressured into removing offensive ads from billboards, the same ads were critically praised for their sociopolitical statements. A number of lawsuits were filed against Benetton by shopowners who claimed that the ads had caused a drop in sales, but these charges were difficult to prove. A downturn in the European economy impacted sales during this period. The images used in the ad campaign have been included in museum collections around the world and continue to spark debate.

Benetton, independently and in conjunction with other groups and organizations, contributed to many initiatives aimed at social problems. Examples include a 1995 campaign aimed at generating AIDS awareness in India. Support for War Child, a charity that helps children in war zones around the world, has also been praised. Autographed Toscani posters were offered to visitors at a clothes show event in exchange for donations to War Child. The Food and Agricultural Organization (FAO) of the United Nations invited Benetton to create a communications campaign for the first world food summit held in Rome.

Benetton's use of information technology facilitates the management of the global business from Ponzano Veneto. Students from around the world study at Fabrica, Benetton's arts and communications research center near Treviso, learning communications in all its forms and using the new technologies that will take them, and Benetton, forward into the future.

Further Reading on Benetton

Additional information on the Benetton family can be found at their official Web site, <www.benetton.com>; in Business Month (February 1989); Business Week (March 5, 1990; April 10, 1995); Los Angeles Times (January 23, 1994; April 21, 1996); New York Times (November 23, 1993; March 20, 1997); Washington Post (January 21; August 29, 1995); and in Italian language references: P. Calvani, "Perche tutti copiano il modello Benetton" Espansione (1986); Giuseppe Nardin, La Benetton (1987); E. Rullani and A. Zanfei, "Benetton: invenzione e consolidamento di un sistema internazionale," Bolletino Ospri (1984); G. Turani, "Benetton sbarchera'a Milano e Wall Street," La Repubblica (December 15-16, 1985).

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