Benetton, the iconic Italian clothing brand founded in 1965, is in the midst of a significant crisis. Once celebrated for its commitment to diversity, inclusivity, and sustainability, the brand is now grappling with severe financial difficulties and a changing retail landscape. The brand’s slogan, ‘all the colours of the world,’ reflected its dedication to social causes like war, racism, and AIDS. However, this focus has not shielded it from the challenges facing its business today.
Store closures and financial struggles
Reportedly, Benetton has announced plans to close over 400 stores globally. By 2024, 180 stores have already been closed, and the brand expects to reach a total of 420 closures by the end of the year. This marks a significant reduction in its physical presence and reflects the challenges Benetton has faced in adapting to new consumer habits.
The brand’s difficulties began in the early 2000s. It struggled to keep up with the fast fashion industry’s rise, which changed how people shop. Despite attempts to reinvent itself, Benetton’s efforts have not been successful, and its market position has weakened over time.
Problems with the franchise model
It is believed that one of the key factors contributing to the crisis is the brand’s franchise model. While this model helped Benetton expand globally, it eventually became a burden. The company faced significant debt, including a reported 30 million euros in southern Italy. This has highlighted deeper issues with the company’s management and strategy.
Leadership dispute and financial issues
The situation worsened with a public dispute between Benetton’s co-founder Luciano Benetton and CEO Massimo Rendon. The conflict focused on the company’s financial mismanagement, with a reported deficit of 100 million euros. This leadership turmoil has added to the company’s difficulties in navigating the crisis.
Restructuring efforts
In an attempt to address these challenges, Benetton has launched a restructuring plan. The plan is aimed at saving the brand, but its success depends on the company’s ability to adapt to the rapidly changing fashion market. The future remains uncertain, and the company faces a tough road ahead.
Potential U.S. store closures
The restructuring plan could also lead to store closures in the United States, although this has not yet been confirmed. Customers are encouraged to check the store locator for updates on the status of their nearest locations.
Future outlook
Despite the challenges, there is hope that Benetton can reinvent itself. The brand has played a significant role in social issues over the years, and its ability to evolve with the changing market could be key to its recovery. However, it will need to adapt its business model and stay relevant to today’s consumers in order to secure a future in the competitive global fashion industry.
Founded in 1965 and based in Ponzano Veneto, Italy, Benetton Group S.r.l. operates a network of about 5,000 stores worldwide. It is a wholly owned subsidiary of the Benetton family’s holding company Edizione. The company’s future will depend on how well it can address its internal issues and adapt to the evolving market.