The Benetton Supply Chain
THE BENETTON SUPPLY CHAIN – CASE STUDY
Retail operations – main objectives Benetton‟s core business is in the manufacturing, production and sale of casual and sportswear, which accounts for 95% of total revenues (Camuffo et al, 2001: 47). The company has a market presence in over 120 countries and has consistently generated revenues exceeding $2 billion throughout this decade (Industry profile, 2007: 15). It has 5,000 retail outlets around the world, the vast majority of which are run by independent managers as part of a franchise arrangement whereby the licensee‟s of those outlets sell products which carry the Benetton brand name (Skjott-Larsen et al 2007: 94). A key objective of Benetton HQ (based in Treviso, Italy) has always been to retain overall control on every aspect of product sales, thereby ensuring that the Benetton “total look” is adhered to. The company is renowned for having a distinctive philosophy which is espoused through controversial advertising techniques (Dapiran 1992:8). Its global network of sales agents each holds responsibility for their own geographic area. They work closely with franchise operators in the sale and distribution of its goods, as well as overseeing all aspects of merchandising (Camuffo et al 2001: 47). A global information system unites every link in the supply chain. Stiff competition has forced Benetton to radically change its retail strategy (Economist: 9 November 2004). To that end it has introduced over 100 „mega-stores‟ and, whilst the majority remain under the franchise system, the company has decided to take direct ownership and control of a few as it seeks to form a closer relationship with its clientele; the logic being that this will facilitate a deeper understanding of customer preferences (Camuffo et al 2001:50). One expert has stated that Benetton – a former market leader – is lagging behind its competitors, not through any defects in its supply chain, but more because it is “less good at seeing the
Retail operations – main objectives Benetton‟s core business is in the manufacturing, production and sale of casual and sportswear, which accounts for 95% of total revenues (Camuffo et al, 2001: 47). The company has a market presence in over 120 countries and has consistently generated revenues exceeding $2 billion throughout this decade (Industry profile, 2007: 15). It has 5,000 retail outlets around the world, the vast majority of which are run by independent managers as part of a franchise arrangement whereby the licensee‟s of those outlets sell products which carry the Benetton brand name (Skjott-Larsen et al 2007: 94). A key objective of Benetton HQ (based in Treviso, Italy) has always been to retain overall control on every aspect of product sales, thereby ensuring that the Benetton “total look” is adhered to. The company is renowned for having a distinctive philosophy which is espoused through controversial advertising techniques (Dapiran 1992:8). Its global network of sales agents each holds responsibility for their own geographic area. They work closely with franchise operators in the sale and distribution of its goods, as well as overseeing all aspects of merchandising (Camuffo et al 2001: 47). A global information system unites every link in the supply chain. Stiff competition has forced Benetton to radically change its retail strategy (Economist: 9 November 2004). To that end it has introduced over 100 „mega-stores‟ and, whilst the majority remain under the franchise system, the company has decided to take direct ownership and control of a few as it seeks to form a closer relationship with its clientele; the logic being that this will facilitate a deeper understanding of customer preferences (Camuffo et al 2001:50). One expert has stated that Benetton – a former market leader – is lagging behind its competitors, not through any defects in its supply chain, but more because it is “less good at seeing the
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