A brand hasn’t reached full pop culture relevance until a late night talk show casually name drops it, for better or worse.
And for Crocs Inc. (CROX) – Get Free Report, that moment came in 2014 during a popular video aired on Conan. The now classic sketch has host Conan O’Brien and actor Dave Franco signing up for Tinder with fake profiles and then seeing who (if anyone) slides right.
In his profile, Franco, writing under the pseudonym Jengis Roundstone, says: “I enjoy wearing Crocs for their style over their comfort. I hear I’m a poor man’s Dave Franco. P.S. duck Dave Franco.”
Franco (or Roundstone) wasn’t really complimenting Crocs. The goal was to appear as creepy and uncool as possible. But nearly a decade later, an unexpected thing happened: People actually do enjoy wearing Crocs for their style, not just comfort.
Sales of Crocs are booming. Brands, ranging from Minecraft and Sonic the Hedgehog to Marvel and Hello Kitty, have struck licensing deals with Crocs. And in a real mind twist, Crocs, according to one study, are wildly popular with Gen Z and Millennials.
What in the name of Jengis Roundstone has happened?
Clogs of the People, For the People
When Crocs debuted in 2002, the unflattering clog was a big hit, even though society almost universally agreed the shoes were ugly. The target demographic were either children too young to care about fashion or middle aged parents too tired to care about fashion because of said children. Being ugly was barely an inside joke.
The company went public with a highly successful IPO but then crashed and burned during the financial crisis. In 2013, The Blackstone Group strengthened Crocs with a $200 million investment; the asset manager currently holds a 11.5% stake in the company, just behind Fidelity Management (13.2%).
What happened next is a remarkable transformation of the brand.
In a move that would likely make a political consultant blush, the company subverted Crocs’ image as “ha, ha, I know the shoes are ugly but they are comfortable” to a more populist “brand OF the people, FOR the people,” according to Crocs’ investor presentation. The company has also called its shoes “democratic” and “the voice of the people.”
The shoes were no longer a joke but rather an authentic representation of self. To that end, Crocs launched a personalization tool called Jibbitz in which consumers could add charms into the shoe’s ubiquitous holes that reflected their interests or personalities.
That’s where Crocs’ partnerships with Minecraft, Marvel, and Hello Kitty come in.
Keeping the Brand New
Crocs’ focus on striking lots of short term licensing deals allows Crocs to reach the most people while keeping the brand fresh and relevant, said Carol Spieckerman, president of Spieckerman Retail consulting firm in Bentonville, Arkansas.
The deals, which also include NBA, NHL, Disney, Warner Brothers, and Nickelodeon, also act as a hedge against Croc knockoffs, she said.
The expanding and changing roster of licensing partners “allows Crocs to constantly infuse newness in their shoes,” Speickerman said. “Instead of signing a long term, exclusive contract with just one brand, the company’s marketing strategy pushes Crocs to stay agile and light their feet.”
In addition, Crocs has aggressively expanded into sandals and paid a hefty $2.5 billion for HelloDude, which makes men’s casual shoes.
The moves have seemingly paid off, both in terms of brand image and actual sales.
L.E.K consulting firm recently published its annual U.S. Footwear and Apparel Brand Heat Index, in which it surveyed 4,000 U.S. consumers between the ages of 14 and 55.
“Footwear consumers are increasingly demanding both style AND comfort, indicating that brands need to develop credible differentiation on both fashion and function dimensions,” the report said.
HelloDude and Crocs dominated the top rankings for both overall men and women casual footwear and among Gen Z and Millennials. Those two generations are especially important because “Gen Z has significant influence over style trends, while millennials have the most purchasing power,” L.E.K. said.
The popularity is also reflected in sales. Last year, Crocs revenue grew nearly 20% to $2.7 billion, while generating a healthy adjusted operating profit margin of 33%.
The company is also off to a strong start to 2023. In the first quarter, overall sales jumped 36% to $884 million; revenue from Crocs-branded shoes grew 19% to $649 million.
“We have tremendous confidence in and clear evidence as to the underlying strength and growth potential” of our brands, CEO Andrew Rees recently told analysts.
Jengus can now confidently and publicly wear his Crocs with pride.