- The Origin: Benetton Siblings
- Company Information: 1998
- The Start of Innovative Advertising
- Brand Development Through 2000s
- 40th Anniversary
- Events & Campaigns
- Current Situation
Benetton was established in 1965 in Ponzano Veneto (Treviso) by the Benetton siblings Luciano, Giuliana, Gilberto and Carlo. At the beginning it was simply an artisan’s workshop specialized in knitwear that was well-designed at rather affordable prices.
“My sister Giuliana,” says Luciano Benetton, “made sweaters for a small shop in our area. One day, she gave me a sweater that was very bright yellow. Well, everyone wanted it. They were tired of the sad and dull colors of the time. Then, said: “Come on, let’s try it; you, Giuliana, will design and I will sell. We bought an old machine to weave stripes onto net stockings. We sold it cheap, and we transformed it. Since then, no one has been able to stop us.”
By 1998 Benetton had a turnover of almost 9 trillion liras, company stores and franchisees all over the world. The company had become the twelfth largest Italian industrial group in the Mediobanca ranking, and it is one of the most important clothing and textile concerns in Italy. Half of the sales came from the traditional areas of sportswear and accessories under the brands; Benetton, Benetton 012, Sisley, Zerotondo, and Tutti i colori del mondo. At this point, the company had licenses for accessories, underwear, beachwear, cosmetics and linens. The other half of the turnover came from more recent areas of expansion: wholesale distribution, highway restaurants, real estate, and merchant banking.
The group produces 80% of their T-shirts, shirts, dresses and trousers, which are sold all over the world, in-house. The remaining 20% has been manufactured abroad for the past few years. In the plants at Castrette, a giant and very modern factory sheds fitted with cables and designed by the architect Tobia Scarpa. At this plant 1,000 people operate computers and control panels that would remind you of one of the great research centers for advanced technology.
Benetton created the Robostore logistics system, which staffs 14 people who sort 30,000 packages a day and 10 million pieces per month. The staff loads them on trucks and, according to the destination, separates them by country and sales point, and looks like a conveyer belt, or like a baggage claim at an airport. The less complicated steps of processing, such as sewing and ironing, are given out by contract to a group of companies in the Veneto work almost exclusively for Benetton and employ 30,000 people.
Benetton is a giant production network which starts with wool from sheep in Argentina and goes all the way to distribution in the last Benetton shop in the third world, or in Greenland, where they sell Benetton sweaters and shirts. It is a network which studies the fabric, designs the Collection, and cuts, dyes and controls the quality, of almost 80 million pieces a year. Also while distributing them, at almost the same moment, and therefore practically without any warehousing, to 7,000 shops in 120 countries.
Over the years Benetton’s advertising campaigns became innovative and often provocative. In 1982, world-renowned photographer Olivero Toscani created for Benetton the first of his multiracial campaigns with the United Colors of Benetton slogan. Later on, the Italian brand moved into controversial issues such as AIDS, Gulf War casualties and so on. From images of A freshly born baby complete with umbilical cord, to a picture of an HIV-positive patient as he lay dying in hospital, Benetton’s campaigns whipped up controversy and placed the brand front and center in the public eye.
As a result, through the 80s and 90s the brand’s penchant for courting controversy helped boost the brand recognition of Italian fashion giant, leading to Benetton’s chain of shops hitting 7,000 worldwide by 1993. In 2000, Benetton advertising had entered a new phase. Fabrica, Benetton’s communication center took over the Group’s communication, ending up collaboration with Oliviero Toscani for 18 years.
In the clothing industry, Benetton seems to have achieved a successful formula and resembles many Made in Italy manufacturing districts, but with only one brain at the top. Everything began almost by chance. And by the 2000s the global annual turnover amounts to about 4 trillion liras. The company is listed on the stock exchange in Milan, New York and Frankfurt.
In March 2000 an agreement is signed for the transfer of the Formula One Team Benetton to the French automotive company Renault for $120 million. Benetton is to continue as the official sponsor for two more years. In Hamburg, a new four-storey superstore opens in the city center. The development of the sales network continues through direct investments in several German cities, after the shop openings in Berlin, Leipzig, Cologne, Düsseldorf, Stuttgart and Hanover. The German market is the second in strategic importance and sales volume after Italy.
By September the first superstore opens in Moscow, at 19 Tverskaya, with 20,000 sq. ft. on three floors. The following month, a new flagship store opens in Cardiff. In December, Benetton concludes an agreement to acquire 12 department stores from the Coin Group, for 25.3 billion liras.
By the end of 2000 the Group’s balance sheet shows consolidated revenues of 3,908 billion liras (€2.02 billion) and a net profit of 471 billion liras (€243 million). The dividend distributed to shareholders was 90 liras per share. Markets in which it grew most were Korea, the U.S., and Japan. In Japan, the Group pursued a strategy of closing down small points-of-sale and opening new mega-stores.
In May 2001 the company reached an agreement with Txt e-solutions, a company specialized in the design and production of software. The agreement foresees the supply of solutions to make mega-store distribution more efficient on a worldwide basis, through a direct control which would show the changes occurring in every local micro-market and allow a response in real time. The program, known as Txt Sc&Cm For Fashion, coordinates the management of supplier relations with the needs of the distribution network in order to optimize it with respect to consumer demand.
September 2001 the Group chooses Bologna for its first mega-store which, thanks to the collaboration with Fabrica, will also be an experimental environment focused on creativity and culture. Also this month the subject of the new communication campaign is voluntary service. The initiative was carried out with the support of UNV, the section for voluntary service at the United Nations. The investment of about 24 billion liras covered press services and bill-posting in 60 countries.
A month later marks the début of a new megastore in Milan, in Corso Vercelli. Soon after there are openings in Palma de Mallorca and Paris, where 2 new flagship stores open on Place de l’Opéra and Avenue des Champs-Elysées, and also in Lisbon. Benetton invests 52 billion liras in three mega-stores in Japan, with one in Kyoto and two in Osaka. The turnover in Japan in 2000 is roughly of 580 billion liras. All together, the Group has 100 mega-stores all over the world, with a target of 300 within 2004, and a distribution network of 5,000 shops scattered in 120 countries. In the previous two years the Group invested about €500 million for the opening of mega-stores in the historic centers of large cities.
At the end of 2001 Benetton had a turnover of €2.098 billion, an EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization&b;) of €398 million and a net profit of €148 million. The result is not directly comparable with the €243 million of 2000 because that was influenced by a gain on the sale of the Formula One Team. In comparative terms, however, the net profit diminished by 6.5%.
According to Forbes in 2002, the Benetton fortune is worth $4.9 billion, corresponding to 62nd place in the ranking of the world’s richest people.
In March 2002 a preliminary agreement is concluded with Viceversa Edizione Design, a company that will create a line for the home under the Benetton brand. Then in July, Benetton issued a three-year bond (debenture loan) for 300 million Euros, the second in the history of the company. Later the company débuted two new stores in Venice and Shanghai.
In February 2003 after opening plants in Croatia, Slovakia and Hungary, Benetton invests $16 million dollars in Tunisia. A new mega-store is opened in Osaka, Japan, with an investment of 1.5 billion yen. It is the tenth since the beginning of 2001. The overall sum invested amounts to 12 billion yen, or about €90 million. In 2001 the turnover in Japan is €200 million, in line with the results in 2000.
At this time, the theme of the new communication campaign is Food for Life, the problem of hunger in the world. Carried out together with the World Food Program, a U.N. agency, it has a budget of €15.7 million.
Also, in march a preliminary agreement is concluded with Prime Newco, part of the Tecnica group, and Benetton sold the brand Rollerblade. This is part of the strategy of concentrating on the core business, which is clothing. The value of the deal is €20 million. Then, Benetton sells the Prince brand of tennis rackets and the Ektelon brand of equipment and accessories for badminton to the U.S. private equity fund Lincolnshire. The value of the deal is €36.5 million Euros. The agreement completes Benetton’s exit from the sports accessory business and plans for the new strategic architecture of the company, a return to the core business of clothing.
In March 2003 Luigi De Puppi abandons his position as managing director of the Benetton Group. Then in April, Silvano Cassano is the new managing director of Benetton Group. He joins the company at a historic moment. The unexpected diversification into sports accessories that began in 1997 ended with the recent sale of Nordica, Rollerblade and Prince. Today the company has refocused its attention on clothing.
In May the first quarter results show revenues of €351 million, net of changes in the exchange rate, a 3.8% increase. Overall turnover is €444 million (compared to €447 million in 2002), due to the anticipated drop in the sporting goods business. The net profit of €25 million showed an increase of 29%. Retained earnings remained at €76 million, while borrowings amounted to €709 million, against €756 million in the first quarter of 2002. Also, the development of new points-of-sale continues. The Groups has plans to open 22 new stores in Russia this year, and 10 more in 2004. The goal is to reach 100 shops within the end of 2004.
At this point, the Benetton Group is present in 120 countries with its brands United Colors of Benetton, Sisley, the Hip Site, Playlife and Killer Loop. It manufactures more than 100 million pieces a year, 90% of which is made in Europe. The distribution network consists of 5,000 points-of-sale. Benetton Group is controlled by the family’s finance company, Edizione Holding, consisting of a network of companies active in different sectors: other than clothing, which makes up 69.9% of the combined activity, there is the autostrade (highway) division, plus restaurant services, telecommunications, real estate, agriculture, and minority shareholdings in various companies.
In total, Edizione Holding has a turnover of €7 billion and employs 50,000 workers. In eight years the Benetton siblings Luciano, Gilberto, Giuliana and Carlo have assembled, piece by piece, under the umbrella of Edizione Holding, a group which, from its beginnings in the textile sector, has now become a conglomerate. In 1994, textiles represented 100% of the turnover; in 2003 sweaters would represent 30% of the total.
In September 2003 the company débuted several new mega-stores in Hong Kong offering the brands United Colors of Benetton, Sisley, Playlife and Killer Loop. Also, in Birmingham offering the brands United Colors of Benetton, Sisley and The Hip Site. Also, in Paris that takes up five floors inside a historic building of the second half of the 1800s, it sells the United Colors of Benetton and the Sisley Collections. The group’s expansion in Germany continue with the opening of a mega-store in Berlin, on three floors, offering the entire Collections of United Colors of Benetton and Sisley.
In October Joel Berg is the new director of United Colors of Benetton. He is responsible for the brand’s image as well as advertising and the presentation of the Collection. At the end of the year Benetton Group presents its strategy for the period 2004-2007. Sales are expected to grow 25% and the gross operating margin by 40%. In order to attain such results without having a price war, product quality is to be improved. The strategy is based on a strong distribution network and production know-how. 2003 closes with a consolidated turnover of €1.859 billion, a net profit of €108 million and a net financial position of €368 million.
In June 2004 the 15th anniversary of Benetton’s listing in the New York’s stock exchange. Also, the group’s presence on the Internet doubles, with the web-sites www.benetton.com and www.benettongroup.com. The first is a web-site focused on consumers, while the second offers financial information and news about the Group’s communication activity. Then, in December 2004, a new store is opened on the very centrally-located via Maistra in St. Moritz. Covering two floors, it offers the entire United Colors of Benetton Collection.
2004 closes with a consolidated turnover of €1.686 billion, €1.504 billion of which is produced by the casual division. The gross operating margin is €757 million, the net profit is €123 million and the retained earnings is €431 million Euros.
The first quarter of 2005 shows a turnover of €378 million Euros (compared to €381 million in the same period of 2004) and a net profit of €23 million (compared to €28 million in 2004). The retained earnings position improves, with €470 million, against €497 million the previous year. LAter, in April a joint venture agreement is signed with the Boyner Group, with the goal of strengthening the Benetton brands in Turkey.
In May 2005 a license agreement is signed with Selective beauty for the worldwide development and distribution of Benetton perfumes. Later in June, the group secures, with a syndicate of 10 banks, a revolving line of credit for €500 million, to be due in 2010. In June a worldwide licensing agreement is signed with Zorlu Holding for the production and distribution of the Sisley Home Collection.
The celebrations featured a fashion show of Benetton’s fall/winter collection, the first time Benetton fashions appeared on the catwalk. The event was held on October 10th 2006 at the Centre Pompidou in Paris. Also, there was a month-long exhibition, `Les Yeux Ouverts’ (Eyes Open to the World and the Future), funded by Fabrica, its communications research centre, and its association with the United Nations’ World Food Programme (WFP).
In February 2008 Benetton launched a new global communication campaign called Microcredit Africa Works in favour of micro-credit in Senegal. This deal was done in partnership with Youssou N’Dour.
OPENING SOON… is a Benetton exhibition featured at Milan Triennale, from January 27 to February 15th 2009. The exhibition is all about the future of the fashion retail space, in partnership with POLI.design and with the contribution of the Fabrica design group. The central theme of the exhibition OPENING SOON… is the present and future evolution of the retail space, an area in which Benetton has been a leading worldwide player ever since its revolutionary debut in Italy in the Sixties.