Brand Health Check... Clunky Crocs must face up to the fashion police

The all-weather shoe company is facing up to the fashion police and a freefalling stock price that has slid 40 per cent, to an all-time low, because of precautionary announcements by senior management that profits and revenues were falling for the first time.

Founded in 2002 in Colorado, the peculiar shoe was first made by a Canadian firm, Foam Creations, as a lightweight boating and outdoor shoe that featured slip-resistant and non-marking soles. The first model sold out upon release in November 2002 and the Crocs phenomenon soon took off globally as millions rushed to jump on the Crocs bandwagon. Sales quickly rose to over 26 million pairs.

By June 2004, Crocs was able to acquire Foam Creations to secure its manufacturing operations plus the patent to the foam resin material that its shoes were made from. Jibbitz, an accessory start-up by a stay-home mum, was then acquired for US$10 million in 2006, to decorate the ventilation holes in the shoes.

The Crocs franchise then continued to grow in 2007 as its product line expanded to over 250 styles and retail points burgeoned to 200 worldwide markets in Western Europe and Asia. CEO Ronald Snyder, delivered a stunning report card of 139 per cent growth and $847 million in total revenue, up from an estimated $355 million from the previous year.

Despite its success, the brand is not without its critics. Fashion writers have long debated the aesthetics of the brightly-coloured shoe. But more worrying are growing negative news reports of the clunky shoes’ safety as its wearers - mainly kids - have had their feet caught on escalators. Recent revelations of Crocs’ first quarter results also point toward the popularity of the footwear having peaked. Snyder concedes how increasingly challenging retail environments and lower consumer spending are beginning to hurt sales.

The company reported its maiden net loss of $4.5 million and has lowered its earnings and sales projections for the year ahead, despite continuing popularity in Asia.

David Dahan, regional planning director, BBDO Singapore

Crocs may have been successful, but it has never been a brand. The name itself is well established but the equities are missing. What does it stand for? Whom are they targeting? It is this absence of clear benefits that has left Crocs to being just a fad. Crocs need to build a clear raison d’être with consumers beyond that of just delivering products.

Success in building such relationships will enable consumers to become fans of the brand. Fans are necessary for brands to thrive and survive. Does Crocs have fans? Kids maybe. But kids don’t drive fashion trends.

They are a fickle group, unlikely to form a die-hard fan base, as was seen with the punk generation staying true to Doc Martens. Besides, kids are not the buyers, the parents are. So they need to be as convinced. And when they hear stories of kids getting injured because their Crocs get stuck in escalators, this doesn’t contribute much in helping the brand.

For Crocs to become a brand, it should stay true to itself and consider going back to its initial core business target: the professionals like nurses, sailors, or cooks who have a real need for such a level of comfort at an affordable price - especially if it comes with a touch of fun.

Ayesha Walawalkar, planning director, JWT Singapore

Why does Crocs no longer rock? The beleaguered makers have pointed optimistically to booming sales in international markets as a signal that the brand is still in robust health.

Asian sales are apparently blossoming - Asia’s orders for Crocs in Q1 2008 were 93 per cent higher than a year ago. However, in Singapore, where the Crocs fad peaked at the end of 2007, a quick survey of feet skipping down Orchard Road tells a different story. The clogs that were so ubiquitous this time last year are now conspicuously absent. While Asia’s retail sector remains largely buoyant, the other contributory factors to Crocs’ US woes are also in play here.

In 2007, Crocs-clad feet were everywhere.

This had inevitable repercussions. Outraged fashionistas and militant mums have been vocal in their condemnation of Crocs as ugly and dangerous. Look-alike Crocs are also cheap and easily available.

In the dash for world domination, the owners do not seem to have a firm grasp of what, exactly, it stands for.

Crocs needs to decide what its core business is, focus on that area, and come back with some relevant innovation - fast.