- [Shopper] They are so cute
and they even smell like the cereal, y'all.
- [Narrator] , Crocs the colorful shoe
that first became popular in the early 2000s,
hit its peak in 2021.
The company reported a record annual revenue
of $2.3 billion in 2021,
up over 60% from the previous year.
And its stock reached record highs.
- The past few years for Crocs has been this moment
of heavy collaboration, constant releases.
They're really trying to put themselves
in front of people
that might not have considered Crocs prior.
(upbeat music)
- [Narrator] The company's success coincided
with the pandemic,
leading some to credit the shoes' popularity to timing,
especially as its stock price has been dropping
since the pandemic boom has waned.
But other comfortable footwear brands
didn't take off the way Crocs did.
So how did Crocs make a name
for itself during the pandemic?
And how did it find success as one
of fashion's most divisive shoes?
This is The Economics of Crocs.
The company was founded in 2002,
the same year it debuted its classic clog.
The name Crocs was inspired
by crocodiles who live on land and in water.
- When Crocs were first released,
they were intended for a consumer
that was looking at them as a functional thing,
so probably gardeners, people that were on boats,
people that worked all day on their feet,
people that worked on a line at a kitchen.
- [Narrator] Part of what makes them so functional
is the material,
a proprietary closed-cell resin called Croslite
that's slip resistant,
lightweight and easy to clean.
- Producing a molded shoe
is certainly simpler in a lot of ways
than assembling a sneaker.
The most underrated advantage they have
over the marketplace
is that it's clear that they're able to kind of do things
that other companies would not be able to do
because of their scale
and because of their production capabilities.
- [Narrator] Crocs sales tool off.
In the first 3/4 of 2005,
it sold 4.4 million shoes,
hitting a revenue of $75 million.
Part of the reason for its initial success
was that the shoe was easy to get.
It was available at retail stores,
gift shops and mall kiosks.
In 2006, Crocs purchased Jibbitz,
a company that made small plastic shoe charms.
That same year, the company went public
and became the largest-ever US footwear IPO at the time.
But in 2008, in the midst of the financial crash,
the company suffered a net income loss of $185 million.
Though the initial craze had simmered,
the brand still managed to hang on
to a relatively large customer base
over the next few years thanks to its global presence.
In 2014, Crocs started making major changes
to its business model,
closing dozens of stores, shifting away from malls
and turning to online sellers like Amazon.
- Crocs announcing today it will eliminate nearly 200 jobs
and close a number of retail stores as part
of a restructuring effort.
- [Narrator] The company also cut back
on the number of styles it sold by between 30 and 40%,
and refocused on the classic clog that made it famous.
The following year,
Crocs invested in a global marketing push
to relaunch its brand image.
(lively music)
Despite its efforts,
the company's stock held steady
until 2020 when the global pandemic hit.
- Prior to people working from home
and not wearing their dress shoes,
not wearing their heels,
there was already this rising wave
of comfort-minded, comfort-first footwear
that was really becoming more popular.
Of course, that accelerated during the pandemic.
- [Narrator] The comfort aspect is what many call the key
to Crocs' success but another important factor
is how easy it is to customize the shoe with Jibbitz.
You could move them to different Crocs over time
as you got a green pair, a camo pair, a pink pair.
The Jibbitz would stay with you and they were yours.
They were almost like the way a key chain on a backpack was
at a certain point.
- [Narrator] This idea of individuality
and self-expression is one
that the brand emphasizes through its marketing campaigns.
(upbeat music)
And on social media,
the uniqueness of the shoe's design has sparked debate.
- Even going back to Crocs' early days,
there were two warring factions
of Crocs are ugly and they're a blight on society,
and we need to get rid of them.
- I don't care how comfortable they are, they're ugly.
- And then there were people that said,
no, they're cute and they're kind of doughy
and they're fun.
- [Shopper] Look how freaking cute these are.
- [Narrator] Crocs leaned into this polarization,
partnering with celebrities and well-known brands
to create limited edition versions of the classic clog.
- I think that's probably the biggest shift
within the fashion world of the past decade
is that people truly seem to design for Instagram
because you wanna stop people from scrolling
and certainly, a show plastered
with fried chicken does that.
- [Narrator] In 2018, Crocs says its Balenciaga clog,
an $850 four-inch platform shoe,
sold out within hours.
And in 2021, Crocs says it partnered
with more than two dozen brands, artists and creators
through collaborations and license programs.
- Sometimes it was through Jibbitz
but sometimes it was like these kind
of crazy revamping of what their clog was.
- [Narrator] Constantly releasing new collaborations
has not only kept Crocs in the press
but it has also helped it break into new markets.
- There're like Croc collectors
that go after every model.
- [Collector] Honey, I am overflowing with Crocs.
- The same way that Nikes resell
on website like Stock and eBay,
Crocs are now reselling.
- [Narrator] Crocs and other comfortable shoes
may have peaked with the pandemic
as people begin to migrate back into work
and consider more traditionalist footwear.
But many others are still prioritizing comfort.
- We're saying that with a lot of doughy running sneakers
that people are wearing.
We're seeing that certainly with the growth of slides
as a huge business in the luxury market.
- [Narrator] Crocs's stock has dropped around 60%
since its November 2021 high.
- I think the market's nervous about the short term.
So we're definitely seeing supply constraints
in the first quarter.
- [Narrator] But the company says its fourth straight year
of revenue growth is fueled by continued global demand,
and it expects revenue to grow to over $5 billion by 2026.
- I think that they might plateau at a certain point.
You can only reach so many consumers but I think for now,
they have been able to convince enough consumers
that they deserve space within their closet.
- And they gotta have the two fingers.
(shopper chuckling)
(playful music)