Benetton franchise owners in Israel, Dubi Shneidman and Eran Weiser, decided to give up after the chain failed to become profitable and after failing to find a partner or sell the rights to the franchise.
Employees were informed this week that the stores would be closed and that all activity would be terminated. The chain's stores have announced a clearance sale with 50% off on all items, although there is not much stock left as the franchisees stopped ordering new goods in the past two months.
Weiser and Shneidman opened Benetton's first branch in May 2011 with the intention of opening 15 stores across Israel.
The opening of the brand's stores in Israel required an investment of millions of shekels on the part of the franchise owners. Some NIS 1.5 million (about $410,000) were invested in the Tel Aviv store alone, an investment which made it difficult for the franchise owners to continue bearing the costs.
The worsening financial situation and the decline in sales suffered by the fashion industry did not benefit the chain either. Another factor which negatively affected the brand was the very small investment in advertising compared to its competitors.
Sources in the industry say Benetton failed to present any innovative fashion pieces and that the prices of its children's clothes, global Benetton's successful category, were too high for consumers living outside Tel Aviv.
In Israel since 1985
The other two branches which opened in the past year, in Rishon Lezion and Netanya, incurred losses to the chain. As first reported by Yedioth Ahronoth, Weiser and Shneidman tried to interest fashion industry officials in purchasing the brand or investing in it, but were unsuccessful.
Benetton first arrived in Israel in 1985, when the franchise owners was Menachem Ben Dov. At its peak, the chain included 15 stores in the Jewish state. In 1997, Ben Dov lost the franchise in favor of Kitan. At the end of 1998, Kitan waived the rights to the franchise and closed the store.
Another attempt was made in 2002 with a store in Haifa's Grand Canyon mall, which was also closed.
The inflow of international brands to Israel has recently slowed down after franchise owners learned that launching a new brand requires great investment efforts.
Italian fashion brand Alcott terminated its activity in Israel after just eight months, and the Fox Group decided to freeze its plan to introduce young German fashion label NewYorker.