United Colors of Benetton makes a splash with its North American licensing program.
UNITED COLORS OF BENETTON, a global brand that operates more than 5,000 stores in 120 countries worldwide, first emerged as a fashion label in the '60s in Treviso, Italy. Known for its vivid color palette and graphic designs, the company founded by Luciano Benetton and his sister, Guiliana, first introduced a colorful collection of sweaters that were knit by Guiliana and sold under the Tres Jolie label. The bold sweaters were introduced at a time when fashion favored a simple, less shocking palette, leading consumers to take notice of the kaleidoscope of color. In the early days of business, Luciano sold the sweaters door to door, and eventually began receiving orders from retailers. In 1965 they opened their first store called My Market, which sold many collections including the new Benetton label. By 1978, there were 200 Benetton stores throughout Europe, and the brand eventually evolved into the United Colors of Benetton after a 1980s ad campaign that ran as "All the Colors."
Although Benetton's core business is in apparel, the company translated its graphic style and sleek design to other categories such as home furnishings and accessories, as well as products for infants. Already available in Europe and Japan, the collection is scheduled to arrive in North America in fall/winter 2005 through an agreement with The Licensing Company North America, Inc. Via the agreement, The Licensing Company, which represents the brand in the North American marketplace, aims to extend the label into other categories. Licensing partnerships are in development in the key areas of home and lifestyle, and kids and accessories.
Via limited distribution, Benetton already collected some revenue in the U.S. from its licensed products such as its watches (Sector), bags and suitcases (ABC), eyewear (Metzler), and tiles (Marazzi), but it now is gearing up for its 2005 launch in the U.S., which will target department and specialty stores. "We have received wide interest in the brand from retailers and major manufacturing companies in the U.S. market," says Angela Farrugia, group managing director, The Licensing Company.
Previously focused on European distribution, Benetton has garnered more than 40 licensees worldwide, ringing up more than $280 million. "We expect to match this in the North American market," says Farrugia. The brand's 32 European licensees span the key areas of home furnishings (paint, tiles, glassware, and bedding), infants (toiletries, bedding, wallpaper, toys, and diapers), and accessories (eyewear, watches, bags and luggage, and toiletries and fragrances). The collection currently is available in department stores and specialty retailers throughout Europe and Japan, as well as some of Benetton's freestanding stores.
Since United Colors of Benetton already successfully executed a licensing plan in Europe, it made sense to implement a plan for the North American market, a region already familiar with the brand. Benetton's splashy North American licensing program debut created quite a buzz at June's Licensing 2004 International Show in New York. Its booth was a showcase of exuberant colors boldly contrasted by a minimalist backdrop. A serene white wall featured an enormous photo of a chic model adorned with bold accessories (in true Benetton fashion). Picture frames, candles and accessories, and luggage were awash in a palette of vibrant orange, vivid yellow, and lime green, among other shocking hues. Says Farrugia, "The feedback we received in New York at the June Licensing Show showed us the power of the brand when combined with such a strong visual presentation. After all, people buy lifestyles, not products.
"Licensing fits into Benetton's core business proposition, which enables the company to expand on the assets of the brand while allowing for communication with consumers in markets it typically wouldn't reach," continues Farrugia. The program is carefully controlled to avoid any overlaps. The prices on the licensed products will be affordable and reach a wider range of consumers than the apparel. "Since the licensed collection will not be sold in the Benetton stores, it will become a brand for major retailers," says Farrugia. "It won't overlap because the apparel will continue to be sold only in the freestanding United Colors of Benetton stores." Among the key challenges of the licensing program is working with ideal partners that share the same vision and passion for the brand and are committed to creating and promoting products. Benetton's success in Europe is an early indication of what's expected in the North American market. "Our experience in the European market has indicated that the home area is among the strongest categories, although we see great potential in baby products," believes Farrugia.
The Benetton brand is experiencing a "massive global resurgence" and, as always, is being supported by cutting-edge public relations and marketing efforts. The company has its own design and communications facility, called Fabrica, also based in Treviso. This research center comprises an international team that supervises its strategic, cultural, and communication policies.
Aside from the visual appeal, Farrugia also stresses the significance of retail concepts. Its vast network of stores increasingly is focused on large floor-space points of sale that offer high-quality customer service. In taking the brand overseas, Farrugia voices her concern that the product is supported by appropriate promotions and in-store POS. She notes that in-store concepts such as promotions are vital to success.
Benetton's team currently is meeting with retailers and licensees to secure new agreements and further develop its retail relationships. "We will decide our first phase of licensees by the end of August," says Farrugia, "and are anticipating six licensees to be signed by the holiday season with an additional 10 to12 in 2005."