"The formula of Crocs is as big a secret as that of Coke..."

By Shweta Mulki, afaqs!, Mumbai | March 01, 2017
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Deepak Chhabra

Deepak Chhabra

CEO and MD, Crocs India

USA-headquartered footwear brand Crocs, founded in 2002 and known for its lightweight, uniquely designed 'clogs', entered India in 2007, via a JV with Chogori Retail. In 2013, Crocs took over operations in this market.

The publicly-listed, 1.2 billion dollar company currently sells about 45 million pairs of 'crocs' annually in a 100 countries.

In India, who wears Crocs? Will growth plateau unless the brand embraces mainstream advertising?

"If you get into the kitchen of a five star hotel, the chances are that the chefs are wearing Crocs," says Deepak Chhabra., CEO and MD of Crocs India, while telling us how the brand has infiltrated the hospitality, healthcare and school zones.

He came on board last September from Reliance Retail, and has previously worked with brands like Skechers, Nike and Tag Heuer.

Edited Excerpts

Crocs is perceived as a premium brand. After a point, premium players face the 'massify'-or-expand point...

We are still premium, but unless we get into sub-branding, smaller towns or hypermarkets, how does one grow?

Last year we sold about one and a half million pairs in India - that's about four percent of the global turnover, which is not small for a premium brand in India.

This year, our key focus areas are geographic expansion - doubling our stores and our web store.

Does the demand for your brand vary by geography?

Demand for Crocs is more in coastal belts because of the rains. So South India, Maharashtra and Goa are major drivers for our business.

In the North and in parts of the East, relevancy drops during the winter since we are not yet seen as a 'shoe' brand. We want to change that.

UK royal Prince William's son George seen wearing Crocs footwear

You have 38 exclusive stores and six kiosks. How do you plan to expand?

If a particular mall can reach a particular revenue threshold, then we go for a store since that needs long-term investment, lease wise. In India, the six metros - with 22 stores, contribute to 50 percent of our revenue. This is true for most premium brands.

We plan to open 50 more stores by the end of December, across the 6 metros and in Pune, Ahmedabad, Chandigarh and also add four to five new cities.

Besides geographic expansion, we also believe that the future of e-commerce lies in the brand's own store rather than other online marketplaces.

Crocs are worn by people of all ages. How do you classify your users based on demographics?

For kids, demand was largely led by the need for lightweight comfortable shoes. The 35-plus age group was buying it for comfort too.

The 16-28 year old segment was not buying it initially. We looked at what was missing. Crocs are known for clogs, flip (V shaped) and slide, but you can't wear it to work or parties, so it becomes 'glorified home wear' or travel wear. That's where the innovation started. In 2013, our entire product segmentation changed. We got into boots, shoes, wedges, flats and booties. We still don't call ourselves a fashion brand, though.

Crocs

We call ourselves a fun, casual brand, with a fashion orientation. Designer Christopher Kane in London Fashion Week had a whole line on Crocs. In India, we will develop something on the same lines.

44 percent of our business comes from loyal customers.

Generally, a customer will own one pair of crocs. The product is durable and lasts for three to four years, after which you get bored, and give it away. So, increasing the penetration in each household is important.

Business breakup-wise we are skewed more towards men (50 percent), then come women (30 percent) followed by kids (20 percent). But new customer acquisition happens through kids... that's how we enter the household.

Your products cost between Rs. 1,400 and 7,000. At these price points, whom do you consider competition in your segment?

Some players are eating into certain segments, but there's no direct competition.

For premium brands like ours, there can be a lot of spill in mass ATL advertising. Initially, our marketing plans were concentrated on the point-of-sale (POS) so we invested in fixtures, pamphlets and basic BTL advertising.

2013 onwards, we invested largely in social media but our budgets were consumed more in sales-led promotions. Digital includes contests to drive web-store traffic, influencer marketing, and spending on Google for sponsored ads and SEO.

This year, there's a change in our strategy. We don't want to grow just by 20-25 percent. We want to double our business. So for the first time, we will communicate through magazines, events, blogger meets, mall events and OOH, in addition to our digital push. Globally, the brand has recently signed up a couple of international names for a larger campaign. In India, some big stars are endorsing local brands - and that does not fit well with an international casual fashion brand like ours.

The Indian footwear segment and consumers' attitude towards it has changed a lot over the past 12-24 months...

In the footwear segment, the branded to non-branded ratio is changing with branded moving up by 300 per cent. And as offices are becoming more casual, formal brands are de-growing.

In men's footwear, in 2012, 65 percent was formal, while in 2015, 60 percent was casual.

But while the per capital consumption of footwear is growing, footwear is still an accessory to apparel... it's not a standalone product segment. That's still a pain.

Also, sports footwear is taking a beating. 90 percent of sports footwear in India is not for sports but for fashion. It is bought because it is cool, not because one is playing.

Your product is 100 percent imported. Will you look at manufacturing in India at all?

It makes more sense to piggyback on global sourcing with scale giving us an advantage. Also, the formula for Crosslite (the patented raw material crocs are made of) is as big a secret as the formula for Coke. There's only one partner in Italy who makes it in the form of granules and ships it to other partners in places like China and Vietnam.

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