‘Everybody talks about China, but for Crocs, India’s the place to be in’
But there are also tremendous barriers in this country that make doing business difficult. Taxation, CST, VAT, moving products from one part to another… is slowing down the process of growth.
Founded in 2002, Crocs Inc, the global casual footwearcompany for men, women and children, has its objective clearly in sight: to get consumers in 90 countries it’s present in to wear its brand seven days a week. Its flagship foam clogs, which sold in as many colours as candies and came to be admired and hated in equal measure globally, no longer forms its core. Rather, the company is working hard on innovation, trying to come out with hundreds of designs not just in plastic or rubber, but leather as well. The firm, whose revenue crossed $1 billion mark during the year ended December 31, 2011, is in the middle of reworking its business model in India.
Florent Andre Bailly, vice-president, the Middle East,India and Africa, Crocs, in an interview with Shailaja Sharma, says an annual 20% business growth is within reach for the next five years as Indian consumers buy shoes frequently. Edited excerpts:
Q: How does the growth in footwear look?A: In July, it’s going to be 10 years since Crocs was established. We moved into India five years later. We just crossed $1 billion in revenue last year. So, within 10 years, we have done a lot of hard work to get where we are. As far as India is concerned, it is an incredible market. We have done nothing yet compared to what is in front of us. That is very obvious. I’m based in Dubai, but I cover Africa, the Middle East and India.
As I am traveling, I can see the changes happening in consumption from one market to the other. Everybody talks about places like China and Saudi Arabia, but when you come here (to India), you see there is a tremendous potential for products like ours. It’s the place to be.
Q: So, what do you want to do here?A: We’ve been here for five years, we are doing a lot of work internally. People come, they work hard, they try to find the way ahead for business and after a certain point, they have to say “Stop, look at where we are, what have we done right, what have we done wrong”. And for the past two months, I hate the word restructuring, but we have been rethinking our business in India.
Q: What is this restructuring going to be? A: When you’re a new brand like this, everybody comes to you. You want to grow, and you want to do business quickly. Today, instead of doing business with everybody, we are selecting our business partners - the major retailers, franchises, distributors. We will reduce the number of partners we do business with directly and set up distributors who will in turn work with others. We try to control the way we are growing. It’s going to give us bigger market coverage. Currently, we operate 21 Crocs stores through our major franchisee Chogori India.
Q: Can you share your observations of consumption in India? Are consumers willing to pay more for your shoes?A: This is a young place. People are seeing increased purchasing power. Where earlier they used to buy a pair of shoes a year, they are buying a pair of shoes every 2-3 months. There is tremendous potential. But there are also tremendous barriers in this country that make doing business difficult. Taxation, CST, VAT, moving products from one part to another… is slowing down the process of growth.
But we can grow this market by 20% easily every year for the next five years. If you compare the original collection of Crocs — excuse the language, but the plastic shoes — with the shoes in leather, we are pooling the prices up. The available family income in a market like India today compared to 5 years earlier is very different.
Q: What is the reason for the company to increase portfolio of products so aggressively? Is it competition?A: It would be unfair to tell you ‘no’. But we are a company that is growing. We are developing a lot of new products to cover the larger market. Competition is there, no doubt. Today, we have golf shoes, we have shoes you can wear everywhere, we have shoes women can wear to the nightclub, we have boots. There are so many opportunities in the footwear market - not just in kids, but in women and men. We want to be a brand for shoes everywhere, anytime.
We are going to have 500 different models in the next collection designed by our design group. Then, we have to reduce that to a portfolio where we will select 200-300 models and divide those by categories - women, men and kids and further divide as per market, retailer, culture, and climate. Some markets are conservative, some are dynamic and young. Look at my shoes, how cool they are! They are leather but as comfortable and light as our other Croslite technology shoes.