Benetton vs. Inditex and H&M: Another Falling Star?
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Benetton, known for its colourful clothes, is truly a global company that had grown within 40 years (founded officially in 1965) from a small family business into a EUR 11 billion business. The Benetton core business generated about EUR 2 billion in 2009. The United Colors of Benetton was the original clothing business with its franchising system. The product range, however has grown immensely. Today, there are around 6,000 Benetton stores in 120 coun tries. Not all diversification activities were successful: Benetton SportSystem that has been mainly developed through mergers and acquisitions and that had reached approximately EUR 425 million in sales in 1998, was phased out. The main brands such as Nordica, Roller blades and Prince were sold by 2004. In addition, the sales development of the core busi ness had been flat during the last ten years. Inditex, less known under its company name, is one of the most dynamic European firms in the fashion industry in the last ten years: its main brands Zara und Massimo Dutti have gained market share in Benetton’s traditional core segments. The Inditex group had sales of about EUR 11 billion in 2009 making it the most important European fashion group. In ditex, founded in 1963 by Manuel Ortega in La Coruna, Spain, opened its first Zara shop only in 1975. However, between 1996 and 2002, Inditex could quadruple its sales through an aggressive policy of company owned store openings. Listed in 2001 at the Madrid stock exchange, the development of Inditex has been highly appreciated by the stock markets. Hennes & Mauritz, better known as H&M, was IKEA for fashion. The motto of this Swed ish company with almost EUR 10 billion in sales in 2009 was: Fashion at the best price. What will be Benetton’s role in this industry and who will win the fashion battle in Europe where strong groups such as H&M, Inditex, the GAP, C&A or Mango fight for market share and where former industry stars such as Marks & Spencer have been slowly fading away?