Crocs capitalizes on consumers' quest for comfort

Naming their company Crocs -- the shoe's side view resembles a crocodile's snout -- they priced a pair at $29.99. It hit a sweet spot; customers crowded around the Crocs booths that the founders set up at boat shows early on, and the shoes soon became popular with nurses, cooks and others on their feet all day and in need of a shoe that could be washed down after every shift. (Indeed, the Crocs medical line was deemed so comfortable that the American Podiatric Medical Association endorsed it as an alternative to flip-flops.)

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"They started buying them by the hundreds," retailer Gordon Reddick recalls of a medical company near his Wrightsville Beach, N.C., shop, which first sold the shoes in basic neutrals: black, white and brown. "But then people started asking for them in colors. And then the kids came in. And now, well, you don't even want to get near that corner of the store when the new (Crocs products) come in."

The initial buzz -- spread almost entirely via word of mouth -- quickly became deafening. Iron Chef Mario Batali showed off his orange pair to TV audiences. (He's since entered a partnership with Crocs.) Jack Nicholson sported a blue pair and Faith Hill a tan pair, and when Britney Spears jumped on the bandwagon, she reportedly bought the shoes in every color. (There are 27 currently available.) Even President Bush was recently spotted in black Crocs as he headed out for a bike ride.

Inevitably, the attention has sparked a backlash against the shoes -- these days it's arguably as fashionable to bash them as it is to wear them.

"They are to your eyes what secondhand smoke is to your lungs," says Vincenzo Ravina, whose Web site features videos in which he and a friend take scissors and firecrackers to the shoes. YouTube is filled with similar fare.

From hot to not almost overnight

If all that sounds like the kiss of fashion death -- the Bush endorsement probably isn't a big plus -- well, it wouldn't be the first time.

"It can happen to any footwear product, anytime, for any reason," says John Shanley, a senior analyst for Susquehanna Financial Group. Shanley ticks off now ignominious brand names like Jellies, Heelys and L.A. Gear, the last of which went from hot to not almost overnight after Macy's ran Sunday ads cutting their prices.

"Within three weeks, retailers couldn't give them away," notes Shanley. The only way to avoid such a fate, he warns, "is to constantly reinvent your product. If you can do that, then you have a chance."

Crocs founders positioned the company to do just that. They first solicited another college buddy, Ron Snyder, to join their team as president in 2004 (Snyder became CEO in 2005). Snyder had run the design division at manufacturing giant Flextronics International (FLEX, news, msgs), where he'd helped churn out reinventions of everything from wristwatches to computer printers. He figured that the key to Crocs' future growth was to give the product enough flexibility to adjust to consumers' changing tastes on the fly.

Unlike most shoe manufacturers, which typically pre-sell their fall lines to retailers in the spring then outsource production to Asia, Crocs makes approximately a third of its shoes in-house. The company retains its original Canadian factory, which it bought out in 2004, and has added facilities in Canada, Mexico and Brazil.

The company takes pre-orders, but "if a particular style or color is hot, (retailers) can order more and we will deliver them while they're still in season," Snyder explains of shoes like the new fleece-lined Mammoth version.

And if "the demand warrants it," he adds, "we can make 10 times more than we originally anticipated."

Continued: A new category of footwear

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