Crocs, an American shoe company with annual revenue of $1.4 billion in 2020, is focusing on two avenues for growth: digital sales and the Chinese shoe market. China, the world’s second-largest shoe market behind the United States, holds major potential for the company.
The company’s recent growth is concentrated in the United States. Looking to China, Crocs plans to target affluent Gen Z Chinese consumers. Generation Z consumers—those born between 1996 and 2015—present a valuable opportunity for Crocs because many of them are new to the brand and they have a tendency to influence other shoppers. Today, Crocs are one of the most popular shoe brands among teens.
According to Crocs CEO Andrew Rees, the company has struggled to resonate with Chinese consumers because of mistakes it initially made entering the country. Now, the company must unravel these mistakes.
Streamlining Its Product Line and Retail Partners
At the height of its initial popularity around 2007–2008, Crocs grew wildly to keep up with demand, expanding into too many product lines, distribution channels, and markets. When the Great Recession hit in 2008, Crocs was caught flat-footed. The company, which had more than 5,000 stock-keeping units (SKUs) at the time ended up with too much inventory.
The next step was narrowing its product focus and geographic footprint. According to a 2014 interview with Rees, he said although the company had a presence in 90 countries, there were only five that really mattered. The company’s five core markets are the United States, Japan, China, South Korea, and Germany.
Over the years, Crocs refined its distribution network and cut its product offering by 80 percent. More recently, Crocs has closed several of its company-owned stores in China and streamlined its retail partners. Moving forward, the company will renovate its stores, revamp its established Chinese partnerships, and find new partners. Currently, Crocs has around 400 stores in the country.
In the United States and Korea, Crocs has experienced success with celebrity collaborations to fuel sales. According to a 2019 investor presentation, Crocs considers its collaborations to be one of the key drivers to the growth and relevance of its clog shoes. The company has worked with Post Malone, Justin Bieber, Ruby Rose, and Luke Combs in the United States to create custom crocs. Crocs is continuing this strategy in China.
Crocs partnered with Yang Mi, a popular Chinese actress and singer. Crocs and MediaMonks China, a creative production company, created an interactive installation inspired by Yang Mi’s personal style in Shanghai at the Taikoo Hui mall to promote the collaboration. The company set up three custom selfie-booths with furnishings, sound, and lighting to allow people to create a personalized picture and video experience. To date, more than 8,000 people have engaged with the installation, generating millions of impressions on social media and increasing foot traffic to the Crocs Energy store in the Taikoo Hui mall.
Crocs manufactures its shoes in many countries, including Mexico, China, and Vietnam. With manufacturing established in China and Vietnam, Crocs will benefit from low-cost manufacturing and easy cross-border trading in the Asia Pacific region as a whole as the business grows over the long term.
Crocs is slowly recovering in China from its past mistakes, establishing a stronger foothold in the country, and elevating its profile in the region. If Chinese consumers adopt Crocs footwear in the same way that U.S. consumers have, Crocs will experience strong growth for many years to come.
In the Classroom
This article can be used to explore some of the factors that influence international business, discussed in Chapter 3: Business in a Borderless World. It can also be used to discuss the product mix and promotion mix in Chapter 12: Dimensions of Marketing Strategy.
- Explain why companies work with influencers and celebrities to promote their products.
- Why do U.S.-based companies work with retail partners in international markets?
- Why does Crocs benefit from China-based manufacturing when it comes to growth in the Asian Pacific region?
This article was developed with the support of Kelsey Reddick for and under the direction of O.C. Ferrell and Linda Ferrell.
CNBC Make It, "How Crocs Became An Unlikely Billion-Dollar Brand," YouTube, May 19, 2020, https://www.youtube.com/watch?v=aDIocMKXO4Q
Damien Robbins, "Crocs: Still Excelling, But More Cautious On The Long Term," Seeking Alpha, June 16, 2021, https://seekingalpha.com/article/4435128-crocs-stock-crox-still-excelling-but-more-cautious-on-long-term
Greg Avery, "The Year of the Clog: Crocs Tries to Crack the Code in China," Denver Business Journal, https://www.bizjournals.com/denver/news/2021/03/05/crocs-china-expansion-clogs.html
Rezwana Manjur, "How Crocs China's Immersive Booth LED to a 32% Conversion to Store Shoppers," Marketing Interactive, June 29, 2021, https://www.marketing-interactive.com/how-crocs-chinas-immersive-booth-led-to-a-32-conversion-to-store-shoppers