Crocs is a world-famous American company that specializes in the distribution and production of comfortable and practical shoes with a unique design. Its headquarters are located in Colorado.
For more than twenty years of existence, this company was able to withstand economic crises, and was even on the verge of ruin. This did not prevent its further successful promotion in the world market.
Exclusive Crocs from this American brand, priced at $800, are now sold out in just a couple of hours. They are worn by models of ultra-luxury fashion houses and world stars.
How did three people, having absolutely no skills in the shoe business, manage to organize a powerful shoe “empire”, starting with the production of ordinary rubber slippers?
Crocs brand history
Businessman Scott Seamans, while traveling on a yacht in the Caribbean with his friends, showed them rubber galoshes that he had purchased before the cruise.
He changed the model a little by attaching a strap to the back. The result is a completely waterproof clog that leaves absolutely no marks on the floor surface of the yacht and does not slip on it.
Due to the wide toe, these shoes were extremely comfortable, and due to their light weight, they were practically not felt on your feet.
However, after walking around the deck in such rubber slippers, they appreciated all their advantages and decided to join Seamans to open their own enterprise for the production of these products.
All three friends were quite successful businessmen at that time. George Baedeker owned the largest chain of 100 restaurants opened in the United States under the Quiznos franchise.
Seamans owned a company that was engaged in the development and manufacture of equipment for medicine and photography. Hanson’s activities were related to the sale of computer equipment.
In 1999, three friends registered and created Western Brands, becoming full owners with equal shares of assets. They divided responsibilities in this way – Baedeker was looking for investors, Hanson was preparing a business plan, and Seamans was refining the product design.
The friends hoped to use this company as a profitable “hobby”, hoping to sell up to 25,000 pairs of Crocs annually.
At that time, the Canadian company Foam Creations was producing rubber galoshes. For this purpose, a special material was used: crosslite, consisting of light synthetic foam resin.
Western Brands has modernized the model of rubber slippers by adding a strap to the back.
The company had 8 employees at that time. In July 2002, George Baedeker was appointed its director.
For the first time, a trial series of Crocs was presented at the International Boat Show. It consisted of two hundred couples. These shoes were advertised by the company as boat shoes, non-chafing, soft and non-slip shoes.
The yachtsmen did not like the appearance of the shoes. However, after trying it on, they appreciated its convenience and practicality. Rubber galoshes with a cut heel and small holes were sold out in just a couple of hours.
Such rubber slippers, costing $30, were liked not only by yachtsmen, but also by people who, due to the nature of their profession, are forced to spend a lot of time standing on their feet – medical and catering workers.
In addition, children loved them. These shoes were simply ideal for them – reliable, light, non-chafing. It was possible to wash off any dirt from it without much difficulty.
Many famous people also chose to wear Crocs. For example, Steven Tyler is the lead singer of the popular musical group Aerosmith, actors Helen Mirren and Jack Nicholson.
The founders of the business did not expect such lightning-fast success. There was an unexpected and uncontrollable demand for their products.
2003 was not very successful for the company. Despite the fact that she sold 76,000 pairs of shoes this year, in the end she not only remained without profit, but was also at a loss.
A year later, the company was replenished with a new management employee, Ron Snyder, who had previously been a manager in an electronic equipment production holding.
At the beginning of its activities, the company used a “democratic” method of supplying footwear products to retail outlets.
Stores were allowed to order only 24 pairs of shoes, and after they were sold, the next batch was provided. In this case, the risk for the retailer was reduced, and there was an excellent opportunity to use as many retail facilities as possible throughout America.
The sales volume of rubber shoes was constantly increasing, which required the launch of new high-capacity production lines.
Croslite is more durable and inexpensive in contrast to leather material. In addition, it does not involve labor-intensive manual processes.
Making Crocs did not present any particular technological difficulties. For this reason, the company could quickly respond to the changing needs of customers and retailers.
Important events 2005-2007
Expansion of geographical boundaries had a positive impact on the company’s high performance – in 2005 it sold more than 5 million pairs of shoes on the world market. Moreover, the year before this figure was only 649 thousand pairs. The company turned a profit with a significant profit – almost $17 million.
The year 2006 was marked by a number of important events for the Crocs holding. In February, it held an IPO raising up to $207 million. One share was quoted at $21. The company’s capital assets were estimated at $940 million.
At the same time, one of the company’s founders (George Baedeker) resigned from the board of directors. This event was accompanied by a major scandal.
By the time it entered the international stock market, the Crocs company was producing a collection of 11 shoe lines and had a staff of 1,130 people.
In America, shoes of this brand were sold in 6,500 retail outlets. In addition, the brand’s products were sold in 1,500 stores in 40 countries, including Japan, Germany and Austria.
The Washigton Post published an article in which it was written that Crocs were quickly spreading throughout the world “like a disease.” This applied not only to real products, but also to fakes.
In 2006, Crocs filed complaints against 11 companies with the American International Trade Commission. They indicated that these companies manufactured and supplied products for sale in violation of patent rights.
In 2005, Sheri Schmeltzer (an American housewife) developed jibits – these are special decorative elements inserted into the holes on Crocs. She and her husband opened their own production and created an online store. In just one year, they sold 6 million pairs of jibits.
By the end of 2006, Crocs bought Jibbitz for $10 million. During the current year, she sold 50 million pairs of Crocs. Its assets by that time were estimated at $6 billion.
The crisis and a successful way out of it
However, after the peak of success there was a decline. 2008 ended with a colossal loss for Crocs. In addition, she was left in huge debt to investors. During this year, management was forced to cut 2 thousand jobs.
Well-known expert in the field of economics Jeff Mintz, giving an interview to The Wall Street Journal, stated that all the existing problems at the Crocs company occurred not only due to the international recession, but also due to reduced interest in the products themselves. The popularity of Crocs has reached its peak, and the market is oversaturated with them.
At the same time, the following trend was noted – buyers, having purchased a pair of Crocs, came for a new one only after a long period of time.
Many well-known newspapers pointed to a paradoxical situation – the demand for clogs was mainly maintained due to the high quality and durability of these products.
Negative trends of that time also included an excess volume of products offered in branded retail outlets, a noticeable decrease in orders from retailers.
In addition, a large number of fakes have appeared on the market. They quickly gained popularity, as in terms of convenience they were no different from branded Crocs. Moreover, they were purchased not only by ordinary people, but also by celebrities.
At the beginning of 2009, the position of head of the company was taken by John Durden, who in the 90s was the general director of the Reebok International holding. He is a reputable, experienced expert in the field of business restructuring.
Durden first took all measures to keep Crocs afloat. First of all, he abandoned the production of low-profit collectible lines of clothing and shoes, reduced staff, and also closed some production plants.
After six months of his leadership of the company, the shoe product line already consisted of 120 modern models. However, classic Crocs did not bring profit. As a result, the annual loss was recorded at more than $40 million.
A year later, Durden resigned as head of the company. This position was filled by John McCarvel. He was one of the first Crocs employees.
Two of the company’s founders continued to lead the company: Scott Seamans as vice president of product promotion and Lyndon Hanson as vice president of customer relations.
The new director was of the opinion that the company’s failures were due to the inability to effectively promote the brand on the world market. He considered that the way out of this situation was to diversify the company’s activities and create opportunities for customers to have a wider choice of products.
John McCarvel developed his own scheme for special shoe layouts in retail facilities. At the same time, the classic models of Crocs were displayed in the background of the halls so that the consumer could get acquainted with the new products when heading to them.
The company’s annual income for 2010 was estimated at almost 70 million dollars, and in 2011 it reached almost 115 million dollars. At this time, new models produced by the company accounted for more than 50% of all production volume, and net annual income was $131.3 million.
However, John McCarvel’s tactics only worked for a short period of time. At the same time, the expansion of production had the opposite effect – customers were tired of the classic Crocs models, and the new line of shoes did not find much response from them.
In addition, a large number of counterfeits and a sharp decline in consumer opportunities had a key impact on the decline in sales volumes. As a result, after rapid growth, financial stability indicators began to decline again.
In 2013, it became known from anonymous sources that Crocs management was going to put the company up for sale. At this time, there was a decrease in its profit, more than 10 times in contrast to 2012 (this amount reached $10.4 million).
Based on data from Forbes, at that time more than half of the company’s management did not have any skills in the shoe field at all.
New management team
In 2014, part of the shares (13%) of Crocs was purchased for $200 million by the investment company Blackstone, whose activities are related with distressed capital assets. In accordance with contractual obligations, the company has replaced senior managers.
The position of president was taken by Andrew Reece, who had extensive experience in retail, and the position of general director was taken by shoe manufacturing expert Gregg Ribatt.
Specialists from such well-known world holdings as Nike, Tommy Hilfiger, Sperry Top-Sider and Reebok came to lower-level management positions.
This leadership team made fundamental strategic changes and developed a plan to completely restructure the company’s operations.
The key goals included laying off approximately 200 employees (from a total workforce of 5,000), ending production of low-performing product models, and closing approximately 100 loss-making retail outlets. At that time, the company owned 624 stores around the world.
The management of Crocs needed not only to optimize internal work processes, but also to competently carry out rebranding. They came to the conclusion that the basis of the brand should once again be the classic Crocs, which once brought the company to the peak of popularity.
It was decided to reduce the product range and focus primarily on the production and sale of clogs.
Crocs – a fashionable youth trend (for zoomers and millennials)
In 2017, the company successfully continued its operations under the leadership of Andrew Rees. He pursued a strategy of closing up to 160 unprofitable stores by the beginning of 2019 (their total number is 558).
This was supposed to be done through collaborations with popular companies and celebrity personalities. Thus, it was possible to attract a young target audience and pass on the fashion for Crocs to this generation.
In mid-2019, the investment company Piper Jaffray compiled a special rating, which included the most popular shoe brands among young people. The Crocs brand occupied 7th position on this list. This is an excellent result, considering the fact that in 2017 it was only in 38th place on this list.
This is due to the fashion trend at that time for “ugly fashion” (“ugly face”) among teenagers and the return of the trend to the style of the 90s.
It was possible to change the company’s image as a manufacturer of ordinary rubber slippers thanks to joint collaboration with popular designers.
Models wore Crocs brand shoes for the first time at a fashion show in 2016. Christopher Kane (a designer from Britain) presented signature galoshes trimmed with decorative stones and marbled colors.
The target audience of fashion publications and magazines was divided due to collaborations into haters and fans of the Crocs brand. The company’s management, when giving interviews, did not hide their intentions to extract maximum benefit from this situation, which fuels even greater consumer interest in the Crocs brand, including through the media.
In addition, the company began cooperation with widely popular streetwear brands Pizzaslime, Alife, Chinatown Market, which helped it attract a younger generation of audience to its brand.
Crocs also began producing exclusive models with the involvement of popular music performers, designers and artists. As the most striking collaboration, we can cite the example of collaboration with the famous US rapper Post Malone. The number of his followers on Instagram is more than 19.5 million people. The Crocs he presented sold out in 15 minutes.
At the end of 2019, the fourth joint collection with this musician was released. It was also implemented in a matter of minutes. The cost per pair was $59.99. This model is currently resold for $149.99.
The Crocs company is trying to adapt to the youth audience not only through an effective marketing strategy, but also through the products themselves.
In 2018, the LiteRide collectible line was introduced, specifically aimed at buyers under 34 years of age. It includes models with a more elegant design compared to classic sandals or clogs from the Crocs brand. Accordingly, their cost is slightly higher – up to $60.
Successful promotion through Snapchat and TikTok
In the spring of 2018, Crocs introduced a special filter for the Snapchat application in the form of a huge clog. More than 23 million US users have published photos using this template.
In addition, the company is succeeding in mastering the TikTok video holding. In the spring of 2019, she launched a viral video on this site, which immediately became popular. In the fall of the same year, Crocs officially registered account on TikTok and managed to gain 100,000 subscribers in literally 7 days.
She also launched a special challenge called “#ThousandDollarCrocs” accompanied by the musical composition Post Malone “I’m Gonna Be”, which contains lines about Crocs priced at $1,000. Fans of the brand were asked to use their imagination and come up with a design for a Crocs model at this price.
Crocs in 2022-2023
During the period from 2002 to 2022, the number of shoes that the company sold was more than 550 million pairs. At the same time, the volume of classic clogs was 60%, this was stated by Andrew Rees in CNBC interview. Due to increased demand, the company managed to increase the cost of this model from 30 to 45 dollars.
At the same time, the company’s management understands that over time the popularity of Crocs will decrease. All trends are short-lived – they come and go, and very quickly.
Therefore, the company is developing plans to release a new collection of Reviva clogs costing up to $40. The main feature of this model is the presence of a special insole with bubbles, which creates a massage effect.
Today, consumers prefer to buy comfortable shoes, so this trend will be popular for a long time – this is the belief of the company. In 2022, profit from the sale of this shoe model increased by 10% compared to 2020.
Crocs owns 370 retail outlets. Crocs are sold in almost 100 countries around the world.
The changes in the company’s activities that began in 2014 have been completed. Production was completely outsourced.
Today there is a significant reduction in the company’s production of Crocs at factories located in China. Currently, Vietnam is considered their main producer.
Currently, the company constantly continues to expand its shoe collection with new assortments. In particular, she began to produce a line of flip-flops and sandals. In addition to these models, the Crocs brand is going to present the latest models of boots.
Company representatives claim that their priorities when making shoes are height and color.
For those who prefer street fashion style, the company has prepared a special “Crocs Echo” line. It is represented by models of boots, clogs and flip-flops, which are distinguished by neutral colors and unique shapes.
The newest Mellow line features sandals with cupped insoles. This model does not have holes intended for jibits. This is provided specifically because many consumers prefer this design option.
However, despite the company’s readiness to satisfy the taste needs of conservative customers, it, of course, prefers not to forget about its own signature feature – the “Jeebits” charms, through which the Crocs brand is personalized.
In addition, the company, together with the 3D commercial electronic platform “Obess”, launched the virtual shopping platform “Jibits”. On it, consumers have a unique opportunity to independently create exclusive shoes of the Crocs brand, by adding up to 26 different 3D charms to the classic clog model. They can also purchase their own personalized pair of shoes on this platform.