Benetton looks to Nguyen to put colour back into the brand

Alessandro Benetton, head of the family firm, is banking on Italy's giant retailer becoming as famous again as it was during the 1980s and lasting another 40 years.

In Ponzana last week, Mr Benetton launched his new strategy with the appointment of You Nguyen, the former vice president of Levi Strauss, in the new role of head of designer and merchandising – in charge of everything from fashion to store architecture.

Speaking to The Independent on Sunday after the launch, Mr Benetton said: "You's appointment is the first phase of our work in pushing forward the business after a difficult few years of global economic crisis.

"We are still a fashion house with strong ethical values and you will see many changes. There will be more new projects, especially in social media (Benetton already invites customers to send in photos to become models) which involve our customers with the brand.

"You is a cosmopolitan and international designer who will be able to take us to the new chapter. The rise of disposable fashion – and many new competitors in an overcrowded market – has meant we have had to evolve further. This is a new chapter for the 46-year-old company – but the book is the same."

As Mr Nguyen said, who would ever have thought that luxury designers such as Karl Lagerfeld would design ranges for H&M, totally upsetting the market. Instead, he said his vision for Benetton was not fashion per se, but for classic and timeless pieces.

The shares seemed to like the news, rising more than 2 per cent on the week to €5.3, valuing the group, with its 4,000 shops in 120 countries, at just under €1bn. But they still have a long way to go. Over the past decade the shares have fallen sharply – back in 2000 they rose to a high of €20 but have languished at around €6 for the past year despite big investment in the stores, such as the redesign of London's Oxford Street shop, and in emerging markets such as China, India and even Mongolia.

Luckily, the Benetton family still owns 71 per cent of the Milan-listed firm and has been able to ride out the past few years of tougher trading. He said the family is happy with the ownership structure as it is, but is still determined to show outside investors that this new strategy will improve results and the company's valuation.

To spread the word, Mr Benetton was out on road shows in Geneva and Zurich last week telling investors how the group was preparing to tackle increased competition in the retail market.

With luxury fashion houses enjoying a boom in emerging markets, analysts say Benetton needs to catch up quickly to show where it fits into the market. The latest move comes at just the right time as merger and acquisition fever has been heating up in Italy and France recently. Companies such as Prada, Moncler and Salvatore Ferragamo are preparing for listings, while Jimmy Choo sold recently for £500m.

But Mr Benetton said the firm has been in markets such as China, India – where it has 400 stores – and Russia for years and that the brand has built up a serious presence in these countries. "I'm not sure investors fully appreciate how deep our presence is in these markets and the growth that we have seen." Nearly a quarter of sales last year were in China and India.

It helps that the 47-year-old heir to the firm, started by his father Luciano in 1965, knows a thing or two about finance: with an MBA from Harvard, he worked in global finance as an M&A analyst at Goldman Sachs, before going on to set up a private equity fund, 21 Investimenti SpA, and joining the family business in 2005.

But it hasn't been the easiest of rides. He said: "When the business was under-capitalised in the 1980s, investors weren't happy. Today when we are well capitalised, they are still unhappy."

Investor short-termism is one of Mr Benetton's favourite hobby horses. He dislikes the demand for immediate results and quarterly reports, suggesting instead that shareholders take a long-term view for society generally, even more so after the financial crisis.

In a recent speech at Harvard, he said: "Throughout the world – here, in the UK, France, Belgium, Italy – slogans ring out and, unfortunately, not just against managers, bankers, entrepreneurs, who are considered, rightly or wrongly, principally responsible for the crisis.

"It's time for a new alliance between capital and work, between responsibility and democracy, to prevent the crisis from becoming a real lack of equality and hence a social problem."

He's certainly always colourful.