Benetton Colours Remain Bright

Almost 50 years ago Luciano Benetton came up with an idea that took the world of fashion by storm. His bright, casual sweaters would be dyed after they had been knitted so that stores could restock faster with the most popular colours. From artisanal origins in Ponzano Veneto, the shops of the United Colors of Benetton spread across Europe and America, promoted by provocative and controversial advertising.

But times change and colours fade. Early this year, there were whispers that the Benetton family might be in financial trouble. The figures, though, show something rather different: Edizione Holding, the Benettons' holding company, owns investments with a market value, after deducting debts, of around 6 billion ($7.3 billion).

Diversifying out of the business that the Benettons knew well, the fashion industry, has worked surprisingly well for one of Italy's best-known family concerns. The Benettons' success in clothing relied on a supply chain of outsourced production tied together with a computerised logistics system, which was well ahead of its time.

By the late 1980s, however, imitators and competitors were catching up. Firms such as Sweden's H&M and Spain's Zara have recently given the Italian company a tough time in high streets and shopping malls. Rumours about financial worries, however, seem to have been prompted by the Benettons' big spending on other businesses. Not content to stick to its knitting, the family has invested heavily over the past ten years in Italian privatisations, usually as part of a consortium.