C rocs are known for their utility — especially their slip resistance. And for one brief moment, Crocs were everywhere: on celebrity chefs, at weddings and red carpets, selling to the tune of 50 million pair a year.
But not even the trademarked Croslite material could keep a company stable in the midst of a $400 million turnaround — from a $200 million profit to a $200 million loss in one year — and a precipitous 44 percent quarterly drop in revenues.
“They ended up opening an enormous amount of stores very quickly,” says Meghan Cleary, a footwear expert and author of Shoe Are You?, a book that explores the image that shoes convey. “That contributed to their [situation] more than any trend. Real estate and inventory they couldn’t support was what got the brand in trouble. I don’t think consumers who loved Crocs stopped loving Crocs.”
That love may have been what kept Crocs from sinking, largely by learning the lessons of the past. No matter how popular the signature clogs were, no company could survive on one look alone. Now Crocs has more than 250 styles, and the company surpassed $1 billion in sales in 2011.
Asia nearly equals the United States in terms of store count, and Asia and Europe grew revenues at about 34 percent in 2011. At the end of fiscal year 2011, the company had 430 retail stores globally, with net growth of 80-100 set for 2012.
“We look at the right demographic at the right types of shopping environments,” says Angela Callaway, Crocs’ retail design director. “It’s a very strategic move, not just growth for growth’s sake.... We’re looking at making sure that our distribution lines up with where our customers are and where we want to take the brand.
“It’s not just about big flagship stores,” she says, “but ensuring we have a balanced portfolio of different types and market entry strategies.”
More than clogs
A recent two-year stretch (2009-10) was nothing short of horrible for the company, which even struggled to make payroll at one point. But in those trying times, Crocs put into place the underpinnings of its resurrection – the high-end, fashion-forward YOU by Crocs.
Still, even when that line launched it “didn’t get a lot of traction at all,” says Cleary. “They’ve put marketing and advertising back into the sub-brand. From what I’ve seen, the designs on that are getting better as well.”
YOU by Crocs is just one aspect of the expansion, which now includes everything from boots to sandals, all built on comfort.
“The essence of every pair of Crocs shoe is Croslite, our proprietary material,” Callaway says. “The comfort factor is undeniable when people try on our new styles and feel how lightweight the shoes are. Our new styles provide the same comfort, but with the style for every wearing occasion.”
Particularly in the women’s shoe market, “there’s a constant battle [of] comfort vs. style,” Cleary says. “When they’re cute and comfortable, that’s the moment that women go nuts. We want to look cute but we don’t want our feet to hurt. Especially now with the economy... We want more out of our purchases across the board.”
Clearer sightlines, more products
About 60 percent of Crocs revenues come from wholesale, but the company has continued to emphasize its own retail efforts.
“Our strategy is that we want to showcase our new product collections,” Callaway says. “We will build on new categories that our wholesale partners are not as quick to jump on. ... Product diversification is key.”
The standard Crocs store is typically brightly colored, featuring rows of the signature clog hanging in a rainbow of colors. With Crocs wanting to be known for more than one shoe, a new store concept was in order. Three redesigned stores opened in the United States last year and another four opened this year in Europe, with larger windows showing a range of footwear.
“The original concept was created when we had … a clog and maybe a couple of other molded styles,” Callaway says. “As we have diversified into a variety of styles, we needed to build in flexibility and different ways to service the customers.”
Crocs is exploring whether to add the ability to shop online; another goal is to “create starting and stopping moments” that allow customers “to digest different collections. We’re making sure it isn’t a sea of shoes that you need to select yourself.”
The new concept stores are performing well, with “room to determine whether they’ve maxed out on the current potential,” Callaway says. “Our initial insight is that they’re scoring a bit higher on the experience perspective.”
New styles bring new opportunities
The expanded footwear line also has opened the company up to new markets, especially those in cooler climates.
“In Europe, we’re just getting a foothold,” says Callaway. “If we grow our stores and showcase more than just the clogs, we’re expecting to see the brand expand.”
The goal is to create “a good 360 [-degree] presence: a good retail distribution, wholesale distribution and internet distribution,” she says. “If you’re able to put your distribution points together to work synergistically with a great product and a strong brand, you can change perceptions and appeal to consumers.”
And there are new opportunities in the United States as well; Crocs recently introduced handbags, socks and smaller accessories, and continues to distribute Jibbitz, the charms that fit into clog holes.
“We’ll continue to explore how we do what is ‘brand right’ and what makes sense,” Callaway says. “We’ll still be leading with footwear, but want to look at how we increase add-on sales and complementary purchases.”
Crocs, says Cleary, “have become a ubiquitous shoe and can continue to drive volume on the classic Croc while doing the bridge line that is going to expand and strengthen their hold in the marketplace. If I’ve never worn a regular Croc, but put on these YOU by Crocs, I might say, ‘What is this technology?’ It could work to cross-platform market the brand.”