From global icon to retail relic, Benetton's vibrant legacy has unraveled, caught between a rigid past and a rapidly evolving fashion future. So what went wrong for the brand that once united the world in color?

In the late 20th century, the name Benetton was synonymous with more than just clothing; it represented a bold, socially conscious ethos, a ‘United Colors of Benetton’ that transcended fashion. Its vibrant knitwear and provocative advertising campaigns, spearheaded by photographer Oliviero Toscani, made it a global phenomenon. From depicting AIDS patients to challenging racial stereotypes, Benetton's ads sparked debate and cemented its place in popular culture. By 1996, the Italian brand boasted of 7,000 sales outlets across over 100 countries, ranking 75th in Interbrand's global brand list in 2000. This was Benetton at its zenith – a brand that was both commercially successful and culturally significant.

The cracks appear

The new millennium, however, brought a shift in the retail world, one that Benetton was ill-equipped to navigate. The rise of fast fashion giants like Zara and H&M fundamentally altered consumer expectations. These new players mastered the art of rapid trend replication and swift supply chains, bringing runway styles to stores in mere weeks at affordable prices. Benetton, with its more traditional production cycles and extensive, less centralized franchise model, found itself outmaneuvered.

"The rigidity of Benetton's approach to distribution did not enable the company to rapidly match changing customer's needs, a capability that was perfectly managed by competitors such as Zara and H&M," noted a study on the brand's decline. This inability to adapt quickly to evolving trends and consumer demands for constant newness was a critical misstep.

The fading ‘colors’

Beyond operational rigidity, Benetton's once-revolutionary advertising began to lose its potency. While Toscani's campaigns were initially groundbreaking, some later efforts, such as the 2000 campaign featuring death-row inmates, proved controversial to the point of alienating consumers and retailers, leading to Toscani's departure and a dip in sales.

As the digital age dawned, Benetton struggled to find a new, compelling voice. Competitors embraced social media, influencer marketing, and direct-to-consumer models, forging new connections with younger demographics. Benetton, by contrast, fell behind. "The brand struggled to stay relevant as newer brands took over the youth market. Benetton lacked strong influencer collaborations and a strong presence on social media," highlighted a report from The NoName Company. The ‘United Colors’ messaging once so powerful, became muted in a crowded and digitally-driven marketplace.

Financial erosion & internal strife

The operational and branding missteps translated directly into severe financial losses. The company, delisted from the stock exchange in 2012 to become a fully owned subsidiary of the Benetton family's Edizione holding, has continued to bleed money.

Table: Benetton Group reported losses (approx figures)

The mounting debt, reportedly surpassing €460 million, also led to internal discord. In May 2024, co-founder Luciano Benetton publicly accused then-CEO Massimo Renon and other executives of mismanagement, citing a €100 million loss. This public spat further underscored the deep-seated issues plaguing the company's leadership and strategy. Claudio Sforza has since been appointed as the new CEO.

The franchise fumble

What was once a cornerstone of Benetton's global expansion—its extensive franchise model—paradoxically became a contributing factor to its decline. While it allowed rapid scaling, it also diluted control over brand consistency, store experience, and inventory management. In an era demanding seamless omnichannel experiences and precise stock control, Benetton's decentralized structure proved cumbersome compared to the tightly integrated operations of its rivals.

A bleak outlook?

Today, Benetton is in a desperate fight for survival. The brand has announced plans to close over 400 stores globally by the end of 2025, with 180 already shut in 2024. Restructuring plans are underway, aiming to reduce losses and achieve a break-even point by 2026. However, the challenges are immense.

From its failure to adapt to the fast-fashion paradigm and its inability to refresh its once-iconic brand identity, to its crippling financial losses and internal turmoil, Benetton serves as a cautionary tale. The vibrant ‘United Colors’ that once captivated the world have faded, leaving a brand scrambling to find its place in an industry that has relentlessly moved on. The path to recovery is steep, demanding not just a new strategy, but a complete reimagining of what Benetton stands for in the modern world.