May 16, 2007
Alessandro Benetton

Ipek Cem recently traveled to Italy to meet with Alessandro Benetton, the Executive Vice Chairman of the Benetton Group at the company headquarters in Treviso. They discussed a wide variety of topics, including the competitive market place for ready-wear and retail business, the Italian economy and the global challenges facing the Benetton Group.

Ipek Cem: My guest today is Alessandro Benetton who is the Executive Vice Chairman of the Benetton Group. Welcome to Global Leaders.

 

Alessandro Benetton: And welcome to Italy.

 

Ipek Cem: Your brand, the Benetton brand has very much been about color and diversity and these aspects have been key concepts over the years. How do you define your brand currently in the 2000's?

 

Alessandro Benetton: The Benetton brand is still a very active brand a very much modern brand, a brand that wants to be very contemporary, very much in line with the people need. A brand that stands for values like accessibility on one side because we believe in a democratic global product, but at the same time with strong values in terms of high quality of the product itself. I think that we need to demonstrate our ability given the high level of competition that we are facing in the market. We have to demonstrate our ability in the next few years of being able to contemplate on one side the basic values of our brands, but at the same time continue to modernize the brand itself. We are optimistic.

 

Ipek Cem: The global market place is always changing very rapidly and speed and globalization are an important factor in the retail industry today. How did you feel your growth is relating to these developments in the world; in the terms of geographies that are coming up, that are growing faster than others, and in terms of certain trends, whether they're in logistics or manufacturing or in the way you present your product?

 

Alessandro Benetton: I think every company has its own DNA. Every company has started in a in a given way and has built his fortune with key elements in the way the entrepreneur or the management thinks. I think especially in the case of Benetton, which is a company that perhaps is not perfect, but has been around for 40 years successfully, which is not a very usual factor in this industry. We shall never make the mistake of looking at our history and our roots and our basic value and abandon them. I think we need to keep it in our agenda in to our radar screen as a key element. At the same time as you mentioned like everybody is observing every market clearly there is a level of competition which is very high and very much focused on speed and ability to face every single market with its own differences. In this respect I think we have done a lot the last couple of years and so we can provide much more collections and faster re-assortment at the store level. So we are very much contemporary from this point of view. We did enormous improvement in this sense. We have many areas in which we plan on growing. I think about India I think about Russia I think about South America as well. Of course I am also counting on solid growth perhaps not outstanding but solid growth in more developed markets. I think we to be good enough to do all of this without changing our basic values.

 

Ipek Cem: When you talk about growth I have noticed that you've been in Turkey for a long time since 1985 and you have over 100 stores and you seem to be continuing the growth. What are some of the attributes of Turkey that you find interesting as a market and what are your plans for Turkey?

 

Alessandro Benetton: -Well as far as the general picture of Turkey I, we are very optimistic and of course we are not the only one. Turkey is a young dynamic country. Its a growing country. I think inflation is coming under control going to an acceptable range of values. There is strong growth. There is a growth in the private sector as well which is very interesting. There is a very favorable demographic in your country. We like all of this  and we can count like it was mentioned before we have a long history in your country as well. We opened our first activity with a local partner in 1985. Today we have 120 stores in your country. We both have the opportunity to experience the quality of the production abilities which you have in your country, but mostly the taste of your consumer. 120 stores in many regions in the Turkish area I think about Georgia I think about north of Cyprus. It was always a little bit of a challenge for Benetton to make sure we maintain the basic image of our company and our products and at the same time we adapt to the needs of a specific country. In this sense having a local partner and a good local partner like we do have in Turkey is always a very important asset in the project of development. We continue in this direction. We have mind opening before the end of 2007 11 new stores, flagship stores among others in Istanbul which will happen in July. And so we are  optimistic about Turkey and of course also for value that you represent in terms of a gate into Euro-Asia.

 

Ipek Cem: When you are present in other countries you are usually present with a partner? Because you have a different model it's a combination of wholesale and retail. Can you  explain how this model works and how you will make it work? Because this has been under inspection.

 

Alessandro Benetton: Absolutely. I think to summarize it we believe that if you want to be a global company, you need to have a relationship with other people, other partners: so basics of our model will stay the wholesale structure or the joint ventures structures. I strongly believe in this. Strongly believe in a Benetton made out of an open model type of approach, where experimentation of new line of businesses, where experimentation of new products or new partners is always possible. I think that you can show your creativity by accepting the creativity of others. This is a dynamic process which you need a to augment and to you need to promote it on a continuous basis. So I cannot imagine a Benetton without this approach. I think it’s part of our DNA. Now clearly there are some circumstances in which we are a retailing operation of course being a solid company with enough resources to invest in to maintenance and development of its own business. We can always count on retailing operations as a tactical tool, but I don't see any element that will induce us to think that it should be a strategic element of our development.

 

Ipek Cem: So in countries like India and China what approach are you taking, are you taking mixed approaches?

 

Alessandro Benetton:  We are taking mixed approaches in both countries like you mention. In India we are starting from 100 stores and in that country I think we have a mixture of wholesale and retail business. This is typical in an emerging and growing economy, because sometimes you have to speed up the ability of having local partners by exploring new areas and demonstrating there is a business in these areas. This has always been a typical aspect of The Benetton business model. Eventually some of these areas which will develop within India, will develop into business areas, will be transferred to wholesale business. But meanwhile we'll have conquered the market share and demonstrated once again the exploring factor of the Benetton business model. I think a mix of 2 elements of retailing and wholesaling can be a reasonable answer for us in India. China is more inclined to be a country, where we can experiment a retailing business. But all of these like I said before, when you want to be present in 120 different countries in the world it requires a constant fine tuning ah process.

 

Ipek Cem: When you when one thinks of the Benetton brand always a certain kind of attitude, social aspect, ethical responsibility these this comes to mind but I'm noticing your advertising campaigns they're not as edgy or not with attitude as before. When you look at fashion is it fashion for the sake of fashion or fashion for some ethical value? How do you define your transformation in this aspect? Is it just my perception or do you feel that there has been a transformation?

 

Alessandro Benetton: I think anything that wants to stay modern needs to transform itself in order. If you want to be like you said edgy or if you want to be more advanced than others you always need to try to look for new ways. Sometimes you succeed sometimes you succeed less. I think Fabrika, our research centre for communication never stops imagining what the future can look like. So the edgy image that everybody has in mind of Benetton belongs to a moment when nobody was recognizing that... I think today one of  the main issues, one of the main goals that I have in my mind is to demonstrate that even non-profit activity or social sensitive elements need to be normal part of company work of an industrial group. Now this is very difficult, because not difficult, but it is challenging. Thinking in terms of charity is always very easy in terms of a personal point of view or from a company point of view. What I don't like and of course all of us do it and we keep on doing it without promoting it hopefully. Or by promoting it, without communicating it too much. But the real challenge is to demonstrate that non-profit or social sensitive issues can become an integral part of the company world. That is more challenging, because it needs to be something that it creates a quote unquote 'value for the operation of the company' that does not depend on the willingness of individuals so that it can stay forever

 

Ipek Cem: What are some issues that you are picking up on right now that will both make sense on the corporate side and also carry social responsibility?

 

Alessandro Benetton: Our institutional campaigns have always especially our latest ones, has  always tried to give visibility to issues that we think are relevant to the world and to the public and for the visibility to those associations that do not have enough resources to do it. I think about Food For Life program I think about some ecological issues that we would like to give visibility to. There is a large list. I think that we continue in this direction. Now sometimes we may not pick the best topic but the direction is a positive direction. And we need to keep the direction.

 

Ipek Cem: Before this responsibility, in the world many people also knew you as being responsible for the Benetton Formula 1 team which actually Benetton has disposed of since. Can you give a sense of that period,and why it was so popular? 

 

Alessandro Benetton: It was a fantastic moment for the company. It was a great intuition by the entrepreneur. The basic concept initially was very easy. You know, global company with global communication and there are very few sports events that could have a global visibility, a worldwide visibility in a constant manner over the years. Formula 1 was one of these vehicles, perhaps the only vehicle and I think we were lucky as well, at least we planned quite well, the opportunity of thinking that there was a period of time in which  car manufacturers were just involved with the managing of the engines not the car itself. So we sneak into that opportunity and we were very successful. It was a magic moment. We were lucky and we were good as well. It was something that could have been done in that period of time. So I think that the mix of the elements was just positive by itself, by its nature. I think if I look at Benetton and I look back at what that experience left us, with is something which is much more than a good financial return than visibility of the brand itself, mostly it was an incredible phenomenon that gave us an image worldwide, that we as Benetton Group stand as a standard for value, and that we could be successful in many things different than textile and clothing. And we like that.

 

Ipek Cem: You are currently Executive Vice Chairman. In one of the recent newspaper articles I read about you. You were saying that “I want to represent the shareholders. The CEO is always doing their job,  I want to do a different job and its not the job of the CEO to be the entrepreneur” So who remains the entrepreneur in the Benetton group? Do you consider it to be Luciano Benetton and the siblings, or yourself? Who is the entrepreneur there?

 

Alessandro Benetton: I think my way of looking at these issues which is becoming very contemporary in Europe, is to think that corporate governance, the independent management, strong management are important issues, an important instrument but at the same time there is a tendency from my point of view, exceeding to a concept that can be very risky; Which is to think that technicalities can solve the long term projects, the long term life of company of activities. This, I don't believe. I think that the technical instrument that can provide you with the best optimization of implementation stages of the current activities.

 

Ipek Cem: Do you mean in terms of operation?

 

Alessandro Benetton: No I mean in terms of, you see these are forces that need to be melted together. Like the long term view of a company. It’s an important element. Somebody who cares about the workers, somebody who cares about the people that work in the company, somebody who cares long term about the stakeholders of a company. So the social environment of the area around yourself, your partners ah ah the unions, there is always need to be somebody who cares about these stakeholders in the longer term. You cannot assume that the efficiency that the stock market and the financial markets, which is an important value in terms of promoting the good management of things, can provide you that sort of vision. So I think many people sometimes make the mistake of thinking that these two elements cannot live together and cannot augment the reciprocal value. I have a different view. I think that when you got good personalities involved, these two elements need to make a company even richer in terms of resources, in terms of projects, in terms of long term stability and good management in the short term. Now who has to represent this? I think that we are a family and you know different projects, we have different personalities of the family representing the interest of the shareholders. It was never an issue, it would never be an issue like it is between the management and the ownership of a company, even within the ownership anybody who can add value can represent a given topic or a given moment is a value to the Group. So it should be seen as an instrument that the company can use.

 

Ipek Cem: You have held and you are still holding other responsibilities and been quite successful also outside of the Benetton group with your merchant bank and other ventures. The Benetton name and Italy also, I know that you are working towards more foreign investment into Italy as well. When you look at the global competitiveness and Italy's place in the world.  When we think of fashion or luxury retailing, a lot of Italian brands come to mind in manufacturing of many artifacts also. These are the immediate products that come to mind. How do you rate Italy's competitiveness today?

 

Alessandro Benetton: I think Italy is a country like other European countries, that living on one side relaunching of the economy and on the other side, they have this internal continuous debate, like many other European countries, of not wanting to abandon all the social rights and the positive elements that were built for individuals after the second world war. At the same time, the world is becoming more globalized and we need to face as Italian as Europeans, we need to face a more stricter and competitive order. I think Italy needs to have a strong strategy in terms of infrastructure, ability to invest more in research and development, and education. Get better in terms of public service and in terms of public administration. This is true for Italy, it is not true for other countries, but it is true for other European countries. How we are going to do this, I think the stimulus of having  a competitive benchmark which Europe can represent is the way to go. I think saying it in different word way, we still have a long way to go but I think we're going and with the push of a strong Europe concept, we can get ah there more quickly.

 

Ipek Cem: When you talk about globalization we are talking about more stores in terms of retail operations but also we are talking about production. When you look at look at your production and how it is distributed around the world, what are some of the trends, what are some of the countries that are getting more of a market share than before? Because they are producing better and cheaper.

 

Alessandro Benetton: I think that you know we manufacture many many millions of garments per year. All of our raw materials come from Italy. We think that one of the basic elements for controlling the quality at the level we like it to be, which has always been for Benetton is the making sure that it your control, your processes are in control, of the raw materials. Now which the world in terms of, we were lucky because Benetton has always been a very international company,that had frequented or had done business with many countries in the world. So we know every time where one specific garment that can be done well at the given point in time. In this respect, we have seen many countries speeding up their learning processes and not just for cost of labour, with the cost of labour element, but also with the logistic, and the ability to manufacture good quality. I think China has done a giant step in that respect. I think east European countries are doing that I think north African countries have done a lot in that respect. Also European countries, some European countries still can be the only be the place where we manufacture and a large part of our production.

 

Ipek Cem:  I'm hearing that you're working now on the men's wear is that is that a big new topic for Benetton to produce more men's wear and make it readily available?

 

Alessandro Benetton: Men products has never really represented the important share of our total turnover that we would like it to be and not even in line with some of our competitors. So we definitely have some room for improvements. We think that the testing this man dedicated store can give us some indication. I think we are good and strong collection in that respect. But also let me mention that other things we doing that I think can give us some satisfaction in the future. We got a new Sisley young line, which can be an interesting product for the market, innovative product. I think we are investing quite a bit into the accessory lines and we investing quite a bit into the underwear segment, so it is the Benetton men's line that we are looking forward to see coming out into the stores.  But ah many other projects as well.

 

Ipek Cem: When you look at local markets there is a global taste we can talk about it because of the media because of the internet especially among young people. There is kind of a global taste. But how do you localize taste? If a certain market is more conservative… Is this done centrally from here or is it decided in the country, is it the way people choose which selection to display in a particular store?

 

Alessandro Benetton: I think a certain part of the collection is a global collection. Because the taste you know through the internet it tends to be very much shared on a world wide basis. Having 5000 stores worldwide gives you a dialogue with the consumer, even the local consumer that can give you some important feedback about the taste, about style, about type of garment that the consumer  wants and where the trends are going.In this respect we do have this which is a big advantage. Of course the local partner can organize this feedback and send it back to us and make a local decision as well. That is what makes a global company.

 

Ipek Cem: How active is Luciano Benetton in the company now. He is the chairman and he doesn't seem to loose his entrepreneurial spirit. So how is the division of labour in terms of his activities and his direction?

 

Alessandro Benetton: I think he definitely represents, he's the living interpretation and the leading the demonstration of his roots, where we come from. I think this type of added value should not be lost from this name at this stage. I think it's important that we can provide an organization where we can build more layers of new values as time goes by. And like it was said before, it is not a question of substituting something, but it is a question of adding something and building something even further. So my father likes to travel and that's a good thing for the company. And the important thing is that we develop an even more technical and sophisticated organization, so that we can get more value out of this company in terms of new projects in terms of new personality presenting new areas of development. This is our goal.

 

Ipek Cem: What do you think is the biggest challenge facing Benetton today in 2007 that you are working on?

 

Alessandro Benetton: From an operational point of view, it is what we talked about. You know we need to make sure we keep investing into new materials, new products new style, new collections being able to take it to the stores I think we are doing this and I'm quite optimistic of it we shall not have any bad surprise in this respect. Of course the market is more and more segmented and it’s complicated to be competitive in 120 countries in the world. Like I said before, you know, you every company has it's own DNA and for sure we will never subtract ourselves from the challenge of looking into the future and looking into new projects. And so I'm not sure I know what is more difficult in order to do that. What I can guarantee you that we will put all the ingredients in order to achieve this.

 

Ipek Cem: In this busy life I hear you have 3 kids. Do you find time for them?

 

Alessandro Benetton: Sometimes I feel guilty about this but you know the way I look at this is that no I do not have a lot of time, but it it’s a good discipline because this forces me to make it a good quality time when I have little time.

 

Ipek Cem: On that note I would like to thank you very much for this interview.

 

Alessandro Benetton: It was my pleasure

 

Interview conducted in Treviso, Italy at the Villa Minelli, which is the Benetton headquarters.

 

This transcript was typed from a transcription unit recording and not copied from an original script. Because of the possibility of mis-hearing and the difficulty, in some cases, of identifying individual speakers, NTV networks and Ipek Cem cannot vouch for its accuracy.