Features - Firm Guidance
JUNE 12, 2000
BY JOE SAWARD
In 1955 clothing salesman Luciano Benetton teamed up with younger sister Giuliana to go into business. Giuliana was knitting sweaters for her friends and legend has it that they sold Luciano's accordion and a bicycle belonging to their younger brother Carlo. With the money raised they bought a knitting machine. Giuliana made the sweaters and Luciano sold them.
The business grew and they opened a factory in 1965 at Ponzani. They opened their first store in Belluno in 1968 and the following year a Benetton shop opened in Paris. Six years later there were 200 stores in Europe. Much of the success was credited to the company's efficient distribution system which helped them move with fashion trends. The success created a demand from people wanting to open Benetton stores and so they were able to adopt an unusual licensing arrangement which meant that the store owners took all the risks. In 1979 the first Benetton stores opened in America and in the mid 1980s the company was so successful that one shop was opening every day.
In order to draw attention to the main company Benetton was looking for an unusual way to advertise its products and former racing driver Nanni Galli, who supplied the Benettons with wool, suggested Grand Prix racing. A deal was struck with Tyrrell for the 1983 season. This was quite successful but the Benettons wanted more American exposure and so switched to the Euroracing Alfa Romeo team in 1984 because Eddie Cheever was the driver. In this period Benetton opened around 600 stores in the United States.
In May 1985 the Toleman team hit financial trouble and realizing that there would be more control if the company owned a team, the Benettons bought the team and changed the team's name to Benetton Formula. The new team was officially launched in February 1986. That year the main Benetton company was floated although the family retains a majority shareholding through its investment subsidiary Edizione Holdings. This company began buying into other businesses including finance, insurance and ski boot maker Nordica. The company's provocative style of advertising has aided growth with interest being aroused in advertising which causes controversy.
In the 1990s the purchases included a variety of firms making sporting goods and these were lumped together into a company called Benetton Sportsystem. This firm was bought by the main Benetton company at the end of 1997 and was reorganized into a chain of stores called Playlife. In recent years the company has bought heavily in the food and hotel industry.