Benetton knitwear a family affair with 4,000 far-flung shops

The huge success of Benetton, the Italian knitwear producer, is the kind that is not easily ignored. The distinctive green shop fronts are everywhere, the product of a carefully planned invasion that has so far established strongholds in 60 countries around the globe.

Every day, somewhere in the world, a new Benetton store opens. To date, there are 600 in the United States alone.

Even the Eastern European countries of Czechoslovakia, Hungary, Bulgaria, and Yugoslavia now have the stores - although in all but Hungary the goods have to be paid for with Western currencies. That restriction effectively bars the products to all but foreigners and high-ranking locals.

``At the last count, the total number of shops was 4,000, but it's impossible to keep an exact tally with this rate of expansion,'' says Paoloa Innocenti, a Benetton spokeswoman.

The story of the company that grew to become Europe's largest manufacturer of knitwear is a tale in the best rags-to-riches tradition.

It all started back in the early 1960s, when brother and sister Luciano and Giuliana Benetton set up in business in the back room of their modest home in Treviso, near Venice.

Using a home knitting machine, Giuliana made up sweaters, choosing the bright, eye-catching colors that were to become the hallmark of the Benetton label.

Meanwhile, her elder brother, who had trained as an assistant in a men's clothing store, used his sales experience to place the homemade products in shops around the area.

The proceeds went toward helping their widowed mother with the upbringing of the two smaller Benetton children, Gilberto and Carlo.

In 1965, the Benettons opened their first small factory, and in the decade that followed they concentrated on the domestic market, establishing their designs as a must for the wardrobes of fashion-conscious youngsters throughout Italy.

Then, 10 years ago, they began the push for the overseas market, at a time when the concept of the international clothing chain store was relatively unknown. In 1977, exports accounted for just 2 percent of the total turnover.

By 1985, that figure was 60 percent, with sales of more than $500 million. Figures for 1986 have not yet been released, but in 1985, the company made a net profit of 96 billion lire ($60 million), up 140 percent on 1984.

Franchise holders pay the Italian company a lump sum of between $170,000 and $300,000 to open a Benetton store. In return for the backing of a vast publicity machine, store holders have to agree to stock only Benetton products and to conform to the standard Benetton shop layout, the prototype of which was designed by Tobias Scarpa, a top Italian architect.

The Benetton recipe for success is based on two things - slick and aggressive marketing and the use of daringly bright colors, irresistible to the younger buyers, both male and female.

A hefty $11 million is spent annually on advertising, almost exclusively on the slogan ``The United Colors of Benetton,'' with pictures of beaming teen-agers, of all races, clad in the Benetton garb.

As for the colors, a huge investment in technology means Benetton can change its hues and patterns at the flick of a switch, and with lightning response to a change in demand.

Designing is done entirely on video display terminals. Computers coded with up to 300 colors weave new patterns and color combinations. The printout becomes a program for the knitting machine.

Computerized cash registers give an instant readout of how a particular style or product is selling.

The results are fed into company headquarters at Treviso, so that uncolored garments can be quickly dyed to the best-selling colors and rushed to the appropriate outlets.

The Benetton distribution plant, said to be the most modern in the world, is like a scene from a science fiction movie. The $25 million center at Castrette di Villorba, near Treviso, is staffed almost entirely with robots. These machines store garments as they come in from the company's eight factories, complete with price ticket in the correct currency for the destined market.

Last year the company celebrated its coming of age by diversifying into other sectors.

A successful alliance with Polaroid for the manufacture of Benetton brand-name sunglasses was followed by an agreement with Bulova of Switzerland, which will be making Benetton watches under license.

Also in the pipeline is a foray into the cosmetics market. Benetton officials say a contract has been signed with an unspecified US company to produce Benetton makeup and scent. North America has been chosen for the launch point of the perfume, due to go on sale in the run-up to next Christmas.

Other notable departures from the world of knitwear include Benetton's recent purchase of the famous Italian Di Varese footwear firm - Di Varese leather moccasins are the de rigueur accessory to Benetton jeans and sweaters - and the sponsoring of formula racing cars.

Despite its extraordinary growth, the company is still very much a family business, in the best Italian tradition. The two younger Benettons, Gilberto and Carlo, have long been drawn into the empire, handling finances and production, respectively. Their sister Giuliana is still in charge of design, while Luciano is the company's managing director.

The Benettons work together closely, using as their base a fine old 17th-century villa outside Treviso which they have jointly bought and restored.

Success has brought the Benetton family wealth, but not the high-society life style enjoyed by other representatives of Italy's business aristocracy, such as Fiat's Giovanni Agnelli. As managing director, Luciano spends large parts of every year traveling - in the Benetton private jet - but at home he drives a four-year-old Alfa Romeo.

As for the future, company officials say they are looking in the direction of Wall Street, where there will be a partial flotation of Benetton shares within the next two years.

Italians who bought some of the first Benetton shares, floated on the Milan stock exchange last June have already seen their investments grow by some 70 percent.