The company did not do well when it first entered the U.S. market, and the group lost almost $10 million in the U.S. in 1991 and $6.6 million in 1990. Luciano Benetton is the vice chairman, founder, and managing director of the group, and he believes that the main problem in the United States has been prices. He believes that to succeed, the group must be more competitive. Benetton executives cite the company's 23.6 percent jump in net income in 1991, and they then dismiss the company's lack of success in the U.S. as only an aberration to be overcome. Benetton raised prices in Europe, held labor costs down, and cut back U.S. distribution to improve the situation. Carlo Tunioli, the new vice president and general manager of Benetton's U.S. operations, blames the company's problems in the U.S. on a failure to see what differentiates an American shopper from a European one (Gold 22-24).
The Benettons entered the clothing industry 25 years ago, and 20 years ago they opened their first store. There are four Benetton brothers who run the company. In Italy they built their company into the country's most dynamic and successful apparel exporting company. In 1987 Benetton sold merchandise world $1 billion to 4,500 franchised stores in 60 countries, and these stores produced retail sales of $2.5 billion. The Benetton's have a stake of 87 percent in the publicly traded retail company Benetton SpA that alone is worth $950 million. The company has continued to grow through the development of new businesses as well as through increased sales. In the 1980s the brothers added stakes in several Italian banks, a mutual fund business, an insurance company, a hotel chain, and the most profitable department store chain in Italy. The family also had a sizable holding of real estate, including large commercial holdings in and around the family hometown of Treviso and in New York City. Forbes estimated that the Benettons were worth $1.5 bi...