By , with 1, shops in Europe 1, of which were in Italy , Benetton was opening stores at the rate of one each working day. Having grown to a mature multinational company, Benetton needed expert managerial direction. Aldo Palmieri, from the Bank of Italy, became Benetton's first managing director in , and brought the company into an era of wide expansion, globalizing its capital base.
Although Luciano Benetton was not initially receptive, leading Palmieri to leave in , the company eventually adopted Palmieri's vision after he had been rehired in The United States became Benetton's fastest growing market by early , boosting sales by 35 percent.
Retail operations also were opened in Eastern Europe--Budapest in March and Prague in September--marking the opening of the first shop by a Western manufacturer since Following a corporate reorganization in December , the company was renamed Benetton Group S. It was now one of the world's largest garment producers, with four factories in Italy and one each in France, Spain, Scotland, and North Carolina, and an annual production growth rate of about 30 percent.
In early , Palmieri approached the international capital market, focusing on the United States, and also began to finance acquisitions and joint ventures. This was the first time that an Italian company had attempted to float stock directly on Wall Street.
In addition, Benetton formed Benetton U. Corporation, listed on the Toronto, Madrid, Tokyo, and Frankfurt exchanges, and made private placements in Europe and Japan. These moves were aimed not only at eliminating short-term debt but also at broadening the shareholder base between Italian and international investors, as Benetton attempted to expand in North America and the Far East, and instilling the discipline required by the U.
Securities and Stock Exchange into its corporate culture. Because financial services were poor in Italy, Benetton began lending to its suppliers. Bencom S. Like the retail line, financial services were structured with the Benetton management philosophy--independent entrepreneurs selling and receiving commissions.
The financial services evolved to include insurance products and personal and corporate financial services. Other nonretail interests included stakes in Italy's largest department store chains, banks, hotels, and real estate. Unfortunately, these ventures required heavy capital investments and took away concentration of management time from the retail sector. Nevertheless, Benetton's retail line was expanded.
Palmieri pushed Benetton to extend the retail product line and introduce a nonretail line, to shift to global manufacturing, and to find local partners able to penetrate difficult or emerging markets in the developing world.
The company introduced a new watch and cosmetic line, incorporated Benetton Japan K. At that time, there were about 5, shops in 70 countries; the EC accounted for 68 percent of sales, North America for 20 percent, and the Far East for 2 percent.
Sales stalled in Italy. In the United States, which accounted for about 15 percent of total sales, revenue fell 20 percent. The slowdown was due to a weak dollar, rising apparel prices, saturated markets, the rising cost of Italian labor, and shifting tastes, especially in the United States. Moreover, in late , several Benetton store owners filed suit in the United States against Benetton's agents, alleging unfair trade practices and also complaining about the disorganization of U.
Benetton countersued two former store owners for alleged defamation. Corporation as an autonomous entity and to improve relations with store owners. Benetton acquired interests in four apparel-related manufacturing companies: Calzaturificio di Varese S. To integrate group logistics, Benetton also acquired Azimut S.
To enhance global production and marketing, Benetton built a factory in Argentina to add to facilities built the year before in Brazil; acquired, incorporated, or sold marketing companies in various countries; opened stores in Warsaw, Moscow, and Cairo; listed on the New York and Toronto Stock Exchanges; planned to expand Benetton Cosmetics, which had operated in North America and Europe for the last three years, into the Japanese and South American markets; and entered into a joint venture with the Japanese trading company Marubeni, creating Benetton Shoes Corporation, to sell shoes in the United States and Canada.
Negotiations also were made with Toyobo on joint plans to enter both the Japanese and Brazilian markets, and with Seibu-Saison to convert its license to a production and marketing joint venture. These developments were representative of Benetton's strategy to first use licensees to gain wide exposure in new markets and then to convert the license into production and marketing joint ventures.
Accordingly, growth also was accelerated by granting licenses to producers in noncompeting industries. The Home Colors trademark was developed by acquiring an interest in Eliolona S.
A new joint venture called United Optical was formed between H. Heinz and the Italian manufacturer Anser to produce spectacles. Furthermore, W. Corporation was incorporated in the United States as a joint venture with Avendero S.
By exports rose to To finance this expansion, Benetton aimed to attract investors in the United States, Canada, Japan, and Europe by making a capital issue of 24 million shares. Moreover, the trademark United Colors of Benetton was adopted. In the meantime, the Federal Trade Commission conducted a preliminary investigation to determine whether Benetton had violated federal statutes by failing to file as a franchiser but dropped the inquiry after Benetton asserted that contracts are negotiated by independent sales agents and that store owners pay no fees or royalties, even though they are required to follow stringent merchandising rules.
In the late s, Benetton gained additional competitive advantage by implementing global networking to connect sales and production. A point-of-sale computerized program, which linked the shops to headquarters, was designed to handle order management, cost accounting, production control, and distribution support. Thus agents began booking 80 percent of each seasonal order six months in advance; the remaining orders were placed midseason and relayed to headquarters by computer.
The point-of-sale program was replaced by late , and Benetton's decentralized operations were linked by a global electronic data interchange network, which also included freight forwarding and customs applications.
Thus in Benetton started to consolidate its stores in the United States as well as Europe, replacing the clusters of smaller stores with the megastore concept, which carried the full Benetton line. An article from. Dive Brief. Published Oct. Kaarin Vembar Editor. Benetton Group. Filed Under: Marketing, Financial News. How traditional teen apparel brands went out of style Gen Z sets trends fast — and they won't hesitate to leave retailers who can't keep up in the dust.
Company Announcements. View all Post a press release. From Ruby Has. From Aptos. From DataFeedWatch Inc. From Revionics. Editors' picks. Latest in Marketing. As a practical characteristic, the stores were about square feet while the competition was usually 1, square feet and 50 percent of all working hours were dedicated to sales the competition, 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 s, the little 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 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 s 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 Benetton's presence was felt in over countries, with 7, sales outlets for their main brands of United Colors of Benetton, Sisley, and The sales network included 80 branches and staff responsible for independent stores in specific geographic areas.
In 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 s. 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 Benetton sponsored sports teams in volleyball, basketball, and rugby.
In the s 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.
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