This year, crocs have once again entered our field of vision, simply because of their “strong alliance of ugliness” (KFC merch is always eccentric) with KFC, releasing crocs with fried chicken on them.
In fact, after a period of popularity in its home market, crocs nearly went bankrupt in the US too. But now, it is creating buzz among American youth with more and weird holey crocs designs, even ranking 7th among young people’s favorite shoe brands.
Originally just meant for boating, how did it become a global hit?
At the beginning, Crocs really were just meant for people active on boats.
In the early 2000s, Lyndon Hanson, George Boedecker and Scott Seamans went to the Caribbean together. At that time Seamans enthusiastically introduced his friends to a type of molded foam clog he was wearing, made of patented foam material that was super slip-resistant.
Hanson and Boedecker thought the product had potential, so they later went specifically to the Canadian company Foam Creations that made those shoes to discuss licensing and cooperation, and added a strap to the original design to create a new product.
The shoe looks a bit like a crocodile snout from the side? Let’s call them Crocs!
In 2002, the founders brought the first Crocs product Beach to the Fort Lauderdale International Boat Show in Florida, and sold 200 pairs. The legendary story of the “holey shoes” officially began.
In the early days, crocs' main consumer base was still people active on boats, and maybe some people wore them for gardening. Overall, the slightly clumsy shape did not really become a reason for people to dislike them.
In 2004, Crocs acquired Foam Creations, the manufacturer of their proprietary material, in order to ensure exclusivity.
Later, people who had to stand all day for work discovered this godsend for their feet - nurses, doctors, chefs, painters, etc. began to wear these soft, lightweight shoes at work, with some starting to wear them in life outside work too, and recommend them to friends.
This is how crocs “went viral”.
By 2006, Crocs had sales in 40 countries worldwide, with annual revenues already as high as $200 million.
Its popularity sparked polarized debate among consumers: Time Magazine named it one of the "50 Worst Inventions in the World", the fashion world criticized crocs as downright ugly, and practical people called them a "heaven for feet".
The New York Times analyzed in 2017 that it was precisely this atmosphere of opposing discussions that won Crocs its unique reputation, with publicity effects "exceeding what advertising or celebrity endorsements could achieve".
By 2007, Crocs' revenue had already reached $854 million, and it still could not meet demand.
To keep up with demand, Crocs quickly expanded production, but unexpectedly encountered the 2008 financial crisis the next year. The rapid expansion and hoarding caused the company to lose $185 million in 2008, almost going bankrupt.
After that, Crocs changed CEOs several times, laid off employees and cleared inventory, allowing the company to survive. Until June 2017, when the then company president Andrew Rees officially also took on the role of CEO, embarking on Crocs' road to revival.
“Ugly beauty” goes online to regain favor with the youth
I'm willing to wear Crocs every day, and then people around me start laughing at me! But at the same time, everyone also starts paying attention to me, and then everyone starts wearing Crocs too.
17-year-old Bibiane Huang, who lives in San Francisco, owns 7 pairs of crocs in different colors, allowing her to wear a different color every day of the week.
Interestingly, her first pair of crocs was bought by her family when she was five. Who could have imagined that by the time she was in high school, crocs would once again become the "trendy thing" among her generation?
We know we are different and unique, and some people might even say we are "ugly". We embrace this polarization, because it brings me attention.
Crocs Chief Marketing Officer Terence Reilly told CNBC. He admitted he was happy that teenagers have fallen in love with crocs again, because they are an important driver of brand communication: "They consume a lot, and young people also drive culture."
Behind this success is the “sweeping reform” by Andrew Rees after becoming CEO.
In April 2017, Crocs share price had fallen to $6 at one point, which was as bad as when it was about to go bankrupt in 2008-09. Two months after Rees took office, he began reducing unprofitable stores and closing factories, gradually outsourcing manufacturing. The marketing strategy also shifted heavily towards online, hiring a series of brand ambassadors and boldly experimenting with crossovers.
In October 2017, Balenciaga brought out a collaboration with Crocs - "sponge cake crocs" - at Paris Fashion Week, directly pushing Crocs back to the forefront of social network discourse. Although controversy continued, “ugly beauty” was played to the extreme.
We mentioned in last year’s article "‘Ins style’ is out of date” that a younger batch of users had already begun to tire of the “perfect feel” created by the vibrant filters of “Ins style”, thirsting for more authentic and sincere expression, which sometimes may look a bit quirky.
Everyone wants to look quirky and interesting, and this is evolving into a trend. All the popular people have crocs.
“I'd estimate 1/3 of the girls in my grade wear Crocs,” said 15-year-old Victoria.
Moreover, even if everyone wears Crocs, each person can still use different “Jibbitz” accessories to create their own unique style. Jibbitz are those charms attached to the holes, each costing $3.99.
In addition to regular Jibbitz, collaborations generally also have special Jibbitz.
By 2018, Crocs had officially closed all its own factories and outsourced manufacturing 100%, shifting marketing resources 100% online and close to youth and internet culture.
In August 2018, New York Times writer Jack Nicas shared a data chart on Twitter, comparing the increase in Crocs stock price versus Bitcoin from 2016-2018, summarizing that "Buying Crocs stock was a better investment than buying Bitcoin."
Although Crocs is not afraid of “ugly”, they are very wary of extremes.
Collaborations can be a bit controversial, but not too controversial, and you have to make sure the message you're sending is all-inclusive rather than judgmental. The risk is, if you associate your brand with a too controversial brand or artist, creating a situation your core customer base can't understand, it will anger them.
Rees said in an interview with Business Insider.
When they started collaborating with young rapper Post Malone, the opportunity for cooperation also stemmed from Post Malone's habit of wearing Crocs at his performances for quite some time without causing much controversy.
Of course, the collaboration with Post Malone is now also a sold out hit.
Continuing on, Crocs has partnered with street fashion brands like Chinatown Market, PLEASURES, and Alife, all of which sold out instantly.
With the “free advertising” from mainstream celebrities like Justin Bieber and Ariana Grande who love Crocs, it’s fair to say the once comfort-first Crocs that were “stubborn to the end” have now finally broken through the fashion circle too.
Stock price soars, but encounters new turmoil
As of January this year, Crocs’ share price had risen 500% compared to when Rees took office as CEO in June 2017.
Judging from the 2019 fourth quarter operating results disclosed by the company in February this year, performance also exceeded expectations: Q4 revenue was $263 million, a year-on-year increase of 21.8%, and gross margin reached 48%; full year revenue for 2019 was $1.23 billion, a year-on-year increase of 13.1%.
However, due to the impact of the COVID-19 pandemic this year, Crocs said on the earnings call that Q1 could face $20-30 million in negative impact, with the full year number expected to reach $40-60 million. The main factors cited at the time were that many stores in Asia, including China, had temporarily suspended operations, with lower customer traffic.
Although the Chinese market accounted for only 5% of Crocs' total revenue last year, the company views China as a key strategic market. This year, they spent heavily to hire Yang Mi as their 2020 global brand ambassador, hoping to make a push in the Chinese market.
In addition, although 70% of Crocs' outsourced factories are in Vietnam and 10% in China, some raw materials need to be imported from China, and some of the factories in Vietnam are also Chinese-invested, so shipment rates are still inevitably affected.
According to data from the American footwear distributors and retailers association, 70% of footwear products in the US are imported from China. Therefore, in addition to Crocs, analysts have also lowered revenue expectations for companies like Nike, Adidas, and Lululemon.
With the pandemic now spreading globally, it remains to be seen whether homebound American consumers will also reduce enthusiasm for breathable, comfortable crocs. Some investors worry whether a new round of turmoil, like the 2008 financial crisis more than a decade ago, will once again rewrite Crocs’ story.
But we can be certain that today's Crocs team is different from the 2008 team. At least in the face of the pandemic, today's Crocs is versatile.
They can make "work from home professional attire" memes, and also go the socially responsible corporate route, giving free crocs to medical staff so they can stand without getting tired. Crocs CFO Anne Mehlman said in an interview:
We have a fantastic product marketing team, they stay close to our customers and market trends. They listen to different voices on social networks and quickly adjust our product and marketing strategies.
You might want to take a look at the introduction of the latest Croc Lights shoe lights.
- 【Rechargeable design】 Built-in rechargeable battery, environmentally friendly materials can be reused, and the battery can last for 72 hours when fully charged;
- 【Small and Portable】With a diameter of 0.98 inches and a weight of 0.71 ounces, it is equipped with a transparent PP box, which is more convenient to carry when going out;
- 【Aluminum alloy material IPX5 waterproof】 Made of aluminum alloy, IP5 waterproof, it can work normally even in heavy rain, a good companion for camping and hiking;
- 【3 Lighting Modes】Set 3 lighting modes, Always on, Papid Flashing, Slow Flashing, press on the head of the light to turn on/off and switch;
- 【Easy to install】The clips are very suitable for the holes of croc, which can be easily installed and removed, and the clips are tightly attached to the upper, not easy to fall off.