ABOUT

Benetton Group S.r.l. is a global fashion brand, founded in Italy, 1965, by three Benetton
brothers and their sister (Luciano, Gilberto, Carlo, and Giuliana). The first store was opened in
1969, by the name ‘My Market’. Benetton network obtains around 5,000 stores across 120
countries today. These stores are managed independently since the company is built on
franchises worldwide. Benetton obtains two clothing brands United Colours of Benetton and
Sisley.

Benetton's success can be found in their innovation of bright colors, the revolution of the retail
outlet, unique sales network, globalization, affordable prices, etc. The company is striving to
abort the bearers such as borders, skin color, language, and political and religious beliefs
(Benetton Group official website).

According to the official website of the company, its values are color (they revolutionized the
color in the fashion industry, promoting the bright colors that are playful and positive); quality;
freedom of expression (giving the employees the right tools, and allowing them to speak freely,
and express their opinions); social engagement (the company aims to promote individual and
community development, advertising the importance of human rights globally); internationality
(aiming to erase the ethnic, cultural and religious differences among people); culture (aiming to
understand and implement all the necessary tools, needed to succeed in today’s contemporary
world).

One of their main advantages over the years of operating is their controversial advertising
techniques, along with the dual supply chain model, which is used to respond quickly to demand
changes and to manage the production, sales, and product design. The reason why the company
over time changed its approach and implemented the dual supply chain model, over the vertical
is because they could not compete any longer with dominant fast fashion companies. Benetton at
the time was launching only 2 collections per year, compared to the multiple collections
provided by their main competitors. This supply chain model enabled them to meet the demands
of the customers as they constantly change.

The company focuses on the relationships with the end customer and tries to respond in real-time
to any changes in demand.
The company consists of a three-tier model:

1. model – suppliers of raw materials, and unfinished goods

2. model – contractors and sub-contractors
3. model – retail outlets worldwide (franchisees, agents, etc.)

DESIGN

The design, planning, and coordination are set in Italy. The company mainly focuses on casual
wear and sports business (since 2014).

The designers (Benetton obtains around 250 designers, mostly located in the design center in
Italy) research the latest trends, mostly by traveling the world. After collecting the new ideas, the
theme of the collection is created. Meaning the colors, types, and quality of fabrics are set. This
service is deployed among dyeing and product department. The product department creates
sketches based on the collected ideas, by hand-drawing them, and later process them through
graphics programs. In the end, they make a prototype of the items, using the chosen fabric. This
department is the connection of all the departments or areas that are involved in the development,
manufacture, and distribution of the products.

Designers are divided into three groups:

1. group – product-men (50 of them) think using commercial perspective

2. group – responsible for researching the fabrics
3. group – responsible for graphics

By implementing a dual supply chain model, the company could offer up to 5 collections each
season, according to the latest trends, and the demand of its consumers. By displaying new items
more often, they created diversity in their range of products, which ultimately attracted the
customers.

The postponement is the foundation of their success. The company delays dyeing of the
products, until the last moment, so that the colors of the new collection are meeting the current
hot colors of the season.
Benetton tried to launch the same or very similar items in all of their markets. But, due to
globalization and other changes in today's world, more than 20% of their products are
customized and designed based on each country's demand, which is measured and determined by
the local individual agents. Because of this, the brand of the company is recognized differently
depending on the country/continent.

MANUFACTURING

The company itself does not manufacture its whole production, but just a part of it. Benetton is
relying on its contractors, which are the companies that Benetton owns (partly, or full). Benetton
is concerning 500 sub-contactors. These companies are there in the service of Benetton factories,
by providing them with tailoring, finishing, and ironing the clothing items. These relationships
are faithful, due to the rapid changes in market trends, and launching the items at the short
notice.

Because of this model, the company delocalizes the production, not only to European countries,
like so far but also to Asian countries, where the production costs are cheaper – raw material,
labor, weak dollar, etc. By 2004, Benetton moved their production to China, moving the sourcing
of inputs, and some logistics. The production location depends on the time needed to market the
product. This system manages both the supply side and demand side of its supply chain.

The Benetton company, as mentioned, owns industrial production. They are located in Italy,
India, Tunisia, and East Europe. They are sources of finished goods. The design team hands over
the design to many production facilities, which later sells the finished product to Benetton.
Finished goods are stored in the warehouse, from which later are transported to the shops.

There are few factors on which the location is depending on such as labor cost, economic and
fiscal incentives, skilled labor, flexibility, etc.

The company also directly controls the supply of raw material, which leads to decreasing costs.

The Benetton company uses two supply chains:

1. supply chain – used by Italian, European, and Tunisian suppliers. They are responsible
for fast fashion and complex products.
 2. supply chain – used by Asian suppliers. They are responsible for the standardized
product, and its production. These products are planned in advance and are made for the
long-term.

DISTRIBUTION

In the 90s, the company created a center where all of the production, logistics, and distribution
will be managed. This so-called 'central pole’, as the company is referring to it, is located in
Italy. This facility saved the company up to 20% on transportation costs. Today, the company
integrated and centralized its global strategy and design.

Benetton is selling its products via various agents. These agents and shop owners are bond by
contractual agreement. Also, they are liable for developing and maintaining the market for the
Benetton store in their geographical area. Some shops are owned by the agents. They established
the efficient flow between the customers, agents, and the factory. The technology enables the
direct flow of communication, that links the agent network with all of the 5,000 Benetton retail
stores. Because of this technology and communication, the postponement of dying can be
utilized until the last moment, when all of the necessary information about the latest
requirements of the market is obtained. The most important advantage of this is diminishing the
wastage, by not overcrowding the inventory, which will decrease the overall costs. At the
moment when information arrives at the center, the company can place an order of products in
bulk, that is going to be delivered from regional distribution centers.

When it comes to logistics, the company has full control, either from manufactured or sourced
products. Benetton is integrating suppliers, manufactures, and retailers in a value chain, that
provides them with speed, efficiency, and flexibility (Dapiran, 1992).
RETAILING

The products are being delivered via ships to the stores. The items are displayed on the shelves
right after they arrive at the retail outlets.

Usually, the stores have limited space for inventory, because they want to expose the brightly
colored items to the shelves, so the colors of garments can add to the store ambiance and
atmosphere. Due to the lack of storage space in stores, the delivery must occur fast and be
precious. This is being done by the already mentioned postponement policy, where they leave the
garment in grey color util the demand happens. Even though it is an expensive approach than
traditional knitting directly with the colored yarn, it is the way they can be efficient and quick to
respond to changes in demand and make fast deliveries to the retail stores.

The main focus of the company today is setting the mega stores (from 120 square meters to
1,500-3,000 square meters). They are trying to display all the items of the collection (garments,
shoes, and accessories segments) at once.