The Benetton siblings, Luciano, Giuliana, Gilberto, and Carlo, grew up in a small town in postwar Italy with bombers flying overhead. While working at a fabric store in the 1960s, Luciano Benetton delivered, by bicycle, colorful sweaters hand knit by his sister, Giuliana, to local patrons. The unusual patterns and bright colors of Giuliana's designs were diametrically opposed to the traditional, muted English sweaters that were typically worn. The popularity of Giuliana's sweaters inspired Luciano to open the first Benetton store in 1968 in Belluno, Italy, followed by a second store in Paris in 1969. The remaining Benetton siblings, Gilberto and Carlo, soon joined Luciano, the business director, and Giuliana, the chief designer, to launch the Benetton fashion empire.
The unique, high-quality, moderately priced knitwear products designed by Giuliana rapidly saturated the European market. In 1979 Benetton decided to expand outside of Europe and opened its first store in the United States in New York. Benetton established a fashion empire through a unique global system of independent retailers. The Benetton system creates a partnership-franchise arrangement whereby the retailer provides the operating capital for the store, fixtures, and merchandise and agrees to stock their store exclusively with Benetton merchandise. In return, Benetton provides the marketing and advertising for all 7,000 stores.
Benetton, along with companies such as Esprit, came to epitomize 1980s fashions. The brightly colored, patterned knitwear captured the active lifestyle of the 1980s youth market and the energy of New Wave music. The fashions were comfortable and affordable, and they crossed social classes. However, Benetton wanted to sell more than fashion; they wanted to sell social awareness. In 1981 Benetton launched their first socially oriented advertising campaign, "All the colors of the world." The advertisements, which embraced diversity, featured models from multiple races, celebrating the United Colors of Benetton. The advertisements, designed by Oliveiero Toscani, incited national debate and propelled Benetton to the forefront of the fashion industry. Successive advertising campaigns continued to espouse the Benettons' views on increasingly sensitive social issues such as terrorism, race, AIDS, and the death sentence, but they rarely featured any of Benetton's products. The advertisements generated controversy and were frequently banned. As the popularity of Benetton's products waned, many questioned whether the advertisements were simply a publicity gimmick to keep the Benetton name in the public eye. The dwindling sales experienced by many Benetton retailers in the United States even resulted in lawsuits by store licensees against Benetton for failure to provide the marketing and advertising required by the franchise agreement.
Throughout the 1990s, Benetton struggled to reposition itself in the U.S. fashion community. At its peak in the 1980s, 700 Benetton stores operated in the United States, but by 1992 only 300 remained, creating annual operating losses of approximately $10-$15 million. In the United States, the Benetton label suffered from a narrow product line with an outdated image and could not compete with hip, trendy retailers such as The Limited and
The Gap. One fashion writer even commented, "They're not fun or buzzy in the way that Gap is. It's about as much of a retail experience as McDonald's is a culinary one" (Mills). To regain market share and profits in the United States, Benetton signed a deal with Sears, Roebuck and Company to launch the line Benetton USA in 1999. The line, which would be manufactured by Sears from designs created by Benetton, was expected to generate $100 million for Benetton during the first year and boost the image of both Benetton and Sears. However, after the Benetton death row advertising campaign resulted in lawsuits in Missouri and picketing by victim rights groups in Texas, Sears canceled the Benetton deal.
By 1995 the Benetton family, through their Edizione Holding Company, realized only about 40 percent of their revenues from apparel. While the popularity, and profitability, of the Benetton label declined, the Benetton family continued to expand their operations through other business acquisitions. Benetton now operates Albatros (whirlpool baths), Enervit (sports drinks), Ecoflam (gas burners), E Group (olive oil and coffee), Autogrill (a fast-food chain), Nordica (ski equipment), Prince (tennis rackets), Ektelon (racquetball equipment), Langert (golf equipment), Kastle (skis and bikes), Asolo (mountaineering boots), and Rollerblade and Killer Loop (snowboards). They also hold half ownership in Euromercato supermarkets.
Benetton is a unique design and retail group. They are the largest clothing manufacturer in Europe and the world's largest consumer of wool for apparel production. At its peak in the 1980s, the Benetton name appeared not only on casual wear for men, women, and children but also on sunglasses, watches, bags, shoes, gloves, hats, jewelry, and even car parts. By 1999 over 7,000 Benetton stores were operating in over 120 countries. In addition to its licensed retail operations, Benetton retails its apparel through Colors, a combination magazine and catalog that provides an outlet for Benetton to transmit its social beliefs. Despite the criticism surrounding Benetton's advertising campaigns, Benetton does invest in society; they give scholarships to young dancers, operate an art school in Treviso, Italy, and support young entrepreneurs through Edizione's Twenty-one Investments. See also: Esprit.
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