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The Changing Tide of Benetton: A Look at the Brand’s Restructuring
In the heart of Como, Italy, a sign recently appeared in the window of a storied Benetton store, reading, “Thank you to all our customers for supporting us and giving us words, smiles, and hugs.” this heartfelt farewell marks the closure of yet another Benetton location, joining a growing list of shuttered stores across Italy—from Liguria to Sicily. The company, once a global leader in vibrant and affordable fashion, is undergoing a significant change.
Over the past year, Benetton
Villa Minelli in Ponzano Veneto,Treviso,serves as one of the offices for the Benetton group (benetton).
Benetton’s production model has faced challenges in efficiency and cost-effectiveness when compared to its competitors. While many brands outsource production to final manufacturers who deliver ready-to-sell products, Benetton manages the entire supply chain directly.This approach, tho ensuring ethical and quality control, has proven more costly and slower. To address this, CEO massimo Sforza is pushing for a streamlined model that reduces expenses and accelerates production, especially to support the growing demand for online sales. Currently, ecommerce accounts for just 12 percent of Benetton’s revenue, substantially below the industry average of 30 percent.
However,the struggles with online sales are onyl part of the story. Sforza’s strategy also involves cutting the number of physical stores, with a focus on closing franchise locations. Over the years, Benetton has relied heavily on franchising to expand its retail network, entrusting external entrepreneurs with the management and costs of these outlets.These franchisees purchase and sell Benetton products under the brand name, while the company contributes partially to expenses and takes a share of sales.This model, once a cornerstone of Benetton’s growth, has now become a liability.
Many franchise stores have amassed considerable debts to the group, totaling 160 million euros. A significant portion of this debt, over 30 million euros, is linked to stores in Puglia and Sicily, where disputes with local franchise owners have escalated. Since late summer, Sforza has demanded immediate repayment, threatening closure for stores unable to settle their dues. In rare cases, Benetton has taken back control of high-potential stores, such as one in Bologna, where four franchised locations were closed last year, and one was converted into a company-owned outlet.
This restructuring reflects Benetton’s broader efforts to adapt to a rapidly changing retail landscape. By shifting focus to profitable online channels and reclaiming control of key stores, the company aims to stabilize its financial footing. Yet, the transition is not without its hurdles. Balancing the need for cost efficiency with maintaining brand integrity and customer trust remains a delicate act. As Sforza navigates these challenges, the success of Benetton’s transformation will depend on its ability to innovate while staying true to its core values.
In recent years, the Benetton Group has faced significant challenges in restructuring its workforce. With approximately two-thirds of its employees on the payroll, the company has been exploring ways to reduce its workforce since 2020. Massimo Messina, general secretary of FILCTEM CGIL Treviso, who oversees textile sector negotiations, revealed that while no exact figures were provided, the goal has always been a substantial reduction in staff. Over the past year, voluntary resignation programs have been introduced, attracting around a hundred participants. Additionally, a “solidarity” contract was implemented in late August, allowing for reduced working hours to prevent outright layoffs.
On the commercial front, the situation is even more complex. Marianna Flauto, national secretary of UILTuCS, is leading negotiations for workers in the retail network, many of whom are not directly employed by Benetton but by franchisees. Flauto emphasized the goal of convincing benetton to absorb these franchises and retain workers. Traditional social safety nets frequently enough fall short for employees at smaller franchises, making the transition particularly challenging.
Luciano Benetton, in 2000 (ANSA)
Globally, the Benetton Group employs around 6,000 workers, with over 1,300 based in Italy. The company’s restructuring efforts, while aimed at streamlining operations, have undeniable social repercussions. Store closures and production simplifications have made many roles redundant,leading to ongoing negotiations with trade unions. In a May interview with the Courier, Luciano Benetton attributed much of the current situation to broader market challenges.
As Benetton navigates these changes, the focus remains on balancing operational efficiency with the welfare of its diverse workforce. The outcomes of these negotiations will likely shape the company’s future in an increasingly competitive retail landscape.
In a dramatic turn of events, Massimo Renon, who took on the role of director in 2020, expressed feelings of betrayal, stating that the company’s economic issues were not disclosed transparently by the management. “I felt betrayed,” he saeid, highlighting the lack of clear communication regarding the financial challenges the company faced.
The Benetton Group,once synonymous with its family-oriented leadership,has undergone significant changes in recent years. In a surprising move, luciano Benetton, who had previously stepped down as president in 2012 and returned to the role in 2018, announced his intention to resign once again. This decision marked the end of the Benetton family’s direct involvement in the company’s management. By June, he was succeeded by Christian Coco, an external manager, solidifying the shift towards a leadership team composed entirely of professionals outside the family circle.
This transition sparked considerable discussion, as the Benetton Group had built its global reputation on its familial identity. Despite the changes, the Benettons remain key stakeholders thru Edizione, their holding company, which oversees a diverse portfolio of businesses. Interestingly, the clothing sector, which made the Benetton name internationally recognized, now represents just 2% of the group’s total operations.
The evolution of the benetton group reflects broader trends in the corporate world, where family-led enterprises increasingly embrace external expertise to navigate complex economic landscapes. While the family no longer holds direct management roles, their influence as owners ensures that the Benetton legacy continues to shape the group’s future.
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