- Meenakshi Kumar |
Despite being an early entrant – almost 25 years ago – way ahead of many of global brands, Benetton has lost ground to late entrants and not been able to cash in on its early mover advantage. In fact, brands like Gap and Levi’s have grown much faster. Benetton India’s profits fell sharply by 79 per cent to Rs 2.3 crore in FY16 with sales rising just 2.2 per cent to Rs 735.3 crores, as per registrar of companies figures. In contrast, Levi Strauss reported a net profit of Rs 79.4 crores in 2015-16, up 64 per cent over previous year with sales growing at 18.5 per cent to touch Rs 752.7 crores.
Moreover, Pepe Jean’s net profits went up 83 per cent in FY-16 to Rs 65.78 crores riding on net sales increase of 29.3 per cent to touch Rs 348.43 crores. Similarly, US Polo crossed the Rs 1,000 crores sales mark in India in 2015-16, less than five years after it entered India. Zara clocks over Rs 1,000 crores in retail sales. Similarly compared to brands like Louis Phillipe and Van Heusen, Benetton has grown at a slower pace.
Benetton views the dip in growth to stiff competition and adverse weather conditions which had resulted in slow sales growth. In 2015-16, Benetton shut nearly 98 stores. For the company FY16 was a tough year due to poor market sentiment and launch of several new fashion brands which had led to strong competition.
Experts say, Benetton has relatively less visibility than competing brands since it goes slow on advertising. Basically, lack of strong brand building efforts is one of the main causes for its slow growth feel experts. Benetton’s slower growth was probably due to their focus on strengthening current operations and improving profitability, rather than expanding.
In fact, till 2015, the brand was growing steadily. Bentton’s focus on Tier II and III cities and apparel for men, women and children would help the company grow. US-based Levi Strauss entered India 15 years back while London-based Pepe Jeans entered India 28 years back. As per a Technopak report, the Indian apparel market has seen growing inclination of consumer towards western wear and casual wear.