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Benetton: End of an Era?

Recent news that Benetton Group would be delisting has highlighted the Italian retailer’s woes, which have been ongoing in the past decade.

Once a brilliant marketing rogue, with its searing “reality advertising” campaigns (who remembers the ad campaign it ran in 2000, featuring creatives of death row inmates with its logo?), Benetton once blazed a trail of both admiration and controversy. Children of the ‘80s and ‘90s will also remember the brand’s prominence and the powerful chord it struck with the youth of the day.

But today it is a shell of its former glorious self. While the controversial ad campaigns go on (few would quickly forget the images it put out last year of the pope lip-locking a prominent imam), its stores are disquietingly empty.

According to a Reuters piece, its revenues have remained stagnant from 2000 to 2010, in a painful comparison to Spanish rival Inditex (which owns Zara) whose sales leapt at least five-fold in that period.

Close to half of its sales come from its local market, a nation pinched by the eurozone crisis and ironically, in cash-rich and status-conscious Asia, where many Western brands are hitting pay dirt, it is making little impact.

According to Julian Barrans, managing director of Interbrand Singapore, Benetton faces a significant challenge – how to return the brand to financial growth as well as regain relevance to its core target audience.

The heritage of the brand lies in colourful clothing and controversial communications, but today people want to buy more then just colours at a reasonable price.

Benetton’s competitors are providing differing competitive offerings such as – innovation and Japanese simplicity, or British coolness, or top runway style. Benetton comes across as quite plain by comparison, Barrans said.

“It relies heavily on controversial advertising campaigns. It is an interesting idea that each of us are romantics who want the world to become a better place, but what does this mean for its clothing ranges?” he added.

In the case of Benetton, Barrans said, the brand campaign promise is not translated clearly through the critical touch points of its shops or product range.

“Not surprisingly its customers are just not buying.”

According to Graham Hitchmough, regional director, ASEAN, The Brand Union Singapore, with a decade of stagnating sales, half of which are generated in a home market wracked by the eurozone crisis, Benetton could be expected to look to the burgeoning consumer culture of Asia as its chance for brand rehabilitation.

“But even here Benetton seems out of step, at a time when other ‘Made in Italy’ brands thrive. I canvassed opinion from our offices across Asia and without fail they reflect back a brand painfully lacking in relevance or a clearly articulated market position.”

Hitchmough added, after rising to prominence in the ‘80s and ‘90s by championing a brazen counter-culture, Benetton began to lose its way, forfeiting its connection with the disaffected youth audience it had once given voice to.

“It is encouraging then that Alessandro Benetton sees the delisting as part of a process of “reaffirming the value of the brand”. However, the recent ‘Unhate’ campaign suggests that it may not yet have learnt the lesson of putting product before politics.”

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