Andrew Rees, CEO of Crocs, explains how to make the brand a mainstream success. – Shoe News
Crocs has come a long way.
From its origins as a boat shoe that debuted at the Fort Lauderdale International Boat Show in 2002 to association with celebrities such as Justin Bieber and Priyanka Chopra, the company has transformed more than a time. Over the past 20 years, Crocs has been defined as a boat shoe, a controversial clog, and now a major statement in the world of high fashion.
This development did not happen overnight.
After its IPO in 2006, the company went through a period of overdistribution and overpenetration just in time for the 2008 financial crisis. Business slowed, new management was put in place, and the company got back on its feet. the rails focusing on international expansion and right-sizing business in the United States
By 2014, revenue had increased significantly, but profitability was still lagging. It was then that the company secured a major investment from Blackstone. That same year, Andrew Rees became president, and then CEO in 2017. Crocs then entered a period of shifting product strategy, cutting costs, and crafting a new marketing message.
“What makes Crocs such a strong brand is that they are extremely confident in their unique product concept and what they bring to the table,” said Kathy Forstadt, Senior Merchandising Manager at Zappos. “They know who they are and they find fun new ways to express it every season, while encouraging others to do the same.”
For his part, Rees told FN that his goal since taking office has been to change perceptions. “We were known to a lot of people, but a lot of people didn’t think it was for them. So it was about creating relevance for the brand,” he said.
This strategy has persisted in recent years, gaining momentum throughout the pandemic and culminating in the brand’s recently announced goal of reaching $5 billion in sales by 2026, which relies on international growth and digital goals. (In the second quarter of 2022, Crocs 2022 brand revenue is expected to be $2.545 billion to $2.615 billion.) Crocs also bolstered its business significantly last December, when it announced an agreement to buy the breakout
comfort brand Hey Dude for $2.5 billion.
Here, Rees discusses the evolution of Crocs – and his role in guiding the company into its next phase.
How has Crocs evolved since its launch 20 years ago and where does it stand today?
Andre Rees: “A very good way to frame the evolution of the brand is probably in three phases: the initial entrepreneurial phase, the international expansion phase and then the solidification phase of the brand. I would say that we are in this final phase. We have completed all this work associated with the repair and professionalization of the company. It’s a 20 year anniversary, so it’s not an old company. Now we’re about halfway through what we see as our immediate growth opportunity. We are seeing very important global megatrends around comfort. Consumers want to be more and more comfortable, especially with shoes, but also with everything they do in their lives. They want value so they can buy that convenience at a reasonable price. And they want style, the right colors and the right patterns. If you can call on all of these things, you have plenty of avenues for growth ahead of you.
What was your product strategy when you joined the company?
AR: “The company had historically started to diversify away from the classic clog. But we thought that was wrong. So we put our product, graphic and stylistic innovation back into [the silhouette], because it is the heart of the brand. It is also our most profitable product area. We have refocused on the Classic Clog and almost exclusively on the molded product, which is our DNA. It’s what we do best. That’s what nobody else does well and that’s where we could win.
How do you balance the growth of Classic Clog with the potential of other categories, such as sandals?
AR: “There are still regions of the globe where we have many opportunities for penetration of classic clogs, such as in Europe, the Middle East, Africa, Latin America and Asia. But we also need to complement that. Our global view of growth is complemented by our focus on sandals. We believe that the core DNA of the Crocs brand – around comfort, lightness, color, fun and inspiration – can be applied well in the realm of sandals. We believe that sandals are a very important growth opportunity – in addition to clog growth, not instead.
When it comes to distribution, Crocs aims to have 50% of its revenue coming from digital channels by 2026. How do channel partners and stores fit into this strategy?
AR: “We want to be a digital-centric company because that’s the consumer trend. And it is also very profitable. But the second most important channel is wholesale. We sell to many different types of people. We want to work very closely with our wholesale partners here in the United States and around the world, because they’re using their capital to grow all of these really great stores, and we want to be sold in those stores. We are not one of those brands that will increasingly switch to DTC. We believe wholesale is extremely important. Our direct stores also have a very specific role to play. More than half of our stores are outlets and this is extremely important to ensure that we can liquidate products at the end of the line. But also, it is a very profitable shopping environment. Costs are lower in malls and traffic is very high. »
What do you think of the goal of reaching $5 billion in sales by 2026, given the recent economic headwinds?
AR: “We feel really good about this goal. I think we are on the right track. We are gaining market share. And if there is a recession or if consumption continues to tighten, we are also optimistic about our chances in this environment as well, as our price is $50. It’s not $150. So we give the consumer the opportunity to refresh their wardrobe and buy something new at a very affordable price. We believe that in a constrained consumer environment, we continue to gain market share. »
How did you decide to buy the Hey Dude brand earlier this year? Are you pursuing similar acquisitions?
AR: “Hey Dude was a brand that we had been watching for a while as they developed and delivered great products. We thought the comfort value they were aiming for was something we could do at Crocs. And we saw many benefits to Crocs shareholders, so we went ahead and did that. We’re excited about the prospects we see for the Hey Dude brand and we think it’s a very good complement to Crocs. we [another big acquisition] again in the future? Maybe? I do not say no. But we have a lot of work on our plate right now to double the size of the Crocs brand and also realize the full potential of Hey Dude. Our immediate goal is the full integration of Hey Dude, the development of this growth platform and the continued growth of Crocs.
Aside from financial goals, what is your ambitious goal for Crocs?
AR: “Historically, most people would describe the Crocs brand as a niche and somewhat polarizing choice. Some people love it, some people hate it. As we move forward, I’d like to see Crocs become a mainstream casual comfort brand accepted by a much wider segment of society. But [we know it’s not always for] Everybody. In fact, it’s very useful to have a group of people who don’t like you because they
creates brand tension. I would love for Crocs to become a mainstream casual comfort brand that offers a broad product portfolio and basically something for everyone.