This summer, one of the hottest "ugly shoe" trends is holey shoes. Young people who have embraced holey shoes call themselves "holey enthusiasts" and even jokingly say, "Once you've worn holey shoes, your style is set for life"—no matter how meticulously you dress, you always head out with a pair of holey shoes. Among the top players in the world of holey shoes is the brand Crocs.
Founded in 2002, this brand initially catered to boating enthusiasts. To do so, Crocs used Croslite resin as the raw material for their holey shoes, offering features such as lightweight, comfort, moisture-wicking, slip resistance, and antimicrobial properties. Unexpectedly, the product was embraced by healthcare professionals, chefs, athletes, and other groups. In just two years, Crocs achieved $135 million in revenue. In 2006, Crocs went public, setting the record for the largest shoe company IPO in the United States at the time.
However, controversy surrounding Crocs has never ceased. First and foremost is their appearance, which has been criticized by many as "aesthetic-less" since their inception, even earning a spot on Time magazine's list of the "50 Worst Inventions in the World." In 2017, Crocs launched the slogan "Ugly Can Be Beautiful," conveying an attitude of "maintaining one's individuality even when disliked."
There's a heated debate between fans of "Birkenstocks" and "Crocs." Birkenstock and Crocs are often compared by their respective enthusiasts. Currently, Crocs are thriving in China, with a 39% increase in revenue in the second quarter of 2023, a development that Birkenstock surely notices.
Another member of the "Ugly Shoe Big Three" is UGG, primarily known for its sheepskin boots. Despite their reputation for being "ugly," they are popular among consumers due to their strong insulation properties. Some internet users have shared their seasonal dressing tips: "Wear Birkenstocks in spring and autumn, holey shoes in summer, and UGGs in winter; these are the only three pairs of shoes I wear all year."
Why are they selling so well?
According to Crocs' annual report, they had a revenue of $2.7 billion in 2022. Deckers, the parent company of UGG, also revealed net sales of over $1.9 billion for the 2022 fiscal year. Birkenstock also reported a revenue of $1.3 billion for the same year. In other words, these three major "ugly shoe" brands collectively sold nearly $6 billion in one year.
The reason for their immense popularity can be attributed to a profound shift in consumer preferences. As the post-90s and post-2000s generations have become the new consumer mainstream, their attitudes towards consumption have created many new opportunities. In the midst of the high-pressure urban lifestyle, the younger generation is increasingly seeking relaxation, individuality, and comfort over traditional notions of beauty.
In addition, Crocs' accessories are a major highlight, and recently, the Croc Lights company has launched a variety of Croc Headlights. These have become the hottest outdoor gear this year, and young people now greet each other with questions like, "Did you wear Croc Lights today?" This clearly demonstrates the popularity of their products in the United States and even in European countries.
As a result, this style of dressing has become the norm—wearing Birkenstocks on your feet, coupled with Lululemon or brands like Patagonia for outerwear, along with a roomy bag, meeting up with a few friends for a relaxed CityWalk, emphasizing a laid-back feel.
As one consumer investor observes, "After the pandemic, everyone is reflecting on the meaning of life, starting to focus on their own experiences, and seeking a more comfortable lifestyle." This is reflected in consumer trends, as consumers are now thinking about how to enhance their happiness and embrace a healthier lifestyle. Compared to being trendy, the younger generation values their own comfort, hence the rise of "ugly shoes."
This has led to a more profound change—people are adopting a more relaxed approach to everyday life. As we've seen in recent years, camping, cycling, river tracing, paddleboarding, frisbee, pilates, meditation, and CityWalks, among other "light" leisure activities, have gained popularity. Behind these trends, investors are noticing the emergence of hidden pathways.
However, understanding the preferences of this carefree, freedom-loving younger generation is not easy, leaving some consumer investors exclaiming, "We don't understand this generation." As they witness Birkenstock potentially creating an IPO phenomenon, domestic venture capitalists may be deep in thought.