North Indians have zero loyalty towards brands, says Deepak Chhabra, MD, Crocs India

The US-headquartered footwear brand Crocs, known for its colourful clogs and flip flops, entered India in 2007. Ever since, it has been a journey from a walk on the beach to the runway.

Crocs, which first appeared globally 15 years ago and treasured for comfort and floatability, was not just popular among ‘cool people’ but toddlers as well.

Priced between Rs 1,500-7,000, Crocs sells footwear through 56 exclusive stores, online marketplaces, multi-brand outlets and a wide network of distributors across the country.

BestMediaInfo.com spoke to Deepak Chhabra, Managing Director of Crocs India, about the future plans of the company, expansion strategy, impact of GST and more.

Excerpts:

Why is Crocs changing its positioning from comfort to style?

In the last 2-2.5 years, we realised that we only play on the comfort proposition and with that alone one can’t attract the younger generation. To attract youngsters, you need to be trendy as well and that is where we changed our product profile from a beach-travel-lounge wear brand to a fashion casual brand. For this, we have done lot of marketing activation to convey that Crocs is no more known about just comfort but it is one of the trendiest brands as well. We have shoes, wedges, heels and others that are trendy. Comfort anyway comes with any pair of Crocs.

The brand is in the expensive range, more for the affluent and niche buyer. Any plan to make Crocs affordable for masses?

It is not expensive, it is value for money. We are not cheap for sure but we deliver value for money. Each and every product can last for five years. Comfort is what we drive and trendiness is what we intend to do and what we are doing currently. Of course, everybody can’t afford Crocs but every brand has its DNA. Gucci doesn’t intent to sell the brand to people who can’t buy it and this is our strategy as well. We have a certain set of TG whom we target and that is quite large. Once we have reached a stage where most of the brand journeys happen then you can get into a sub-brand that could be cheaper than the core brand. And then you can address your consumer whom you could not do by your core product offering. Till the time you don’t saturate your consumer who cannot afford your core product you tend to go for sub-branding.

What is your current market share?

Market share depends on where the brand pitches in. Crocs as a brand doesn’t have any competition. There is not even one brand that is directly competing with us. We are not a sports brand so we don’t compete with Nike, Adidas and Reebok and we are not a casual leather brand like Woodland or Timberland. So, in the absence of such space, we can compare it with brands selling casual footwear. In the casual organised footwear space, we have a 10% share.

A lot of ‘me-toos’ have come up, springing up a whole new unorganised sector copying Crocs. How do you tackle this issue?

We are always happy as there are so many me-toos, it only happens to a successful brand. Nobody copies a brand that is not successful. Our brand and our most sold design, clock, are patented and not just registered. All other designs are registered. We are about 15 years old globally and we entered India around 10 years back. Globally we sued around 7,800 brands because of infringing our IP rights. Three years ago at the time of our rebranding, we held a large auction and sued even our partners. We keep on cleaning up many me-toos but they keep on coming up.

What are the strategies to expand the market share further?

That’s what we could achieve in the last 2.5 years. Unlike any other brands, our TG actually starts from 0 age and we are pretty strong in kids. One kid out of five will be seen wearing Crocs. We are popular in the 40+ age group and old age as well. The TG between 16-25 years is a bit less in our portfolio that is now changing because of the introduction of lot of trendy yet comfortable products. So, our TG is 0-90 years and our core TG is 0-10 years in kids. We are investing in people aged between 10-25 years to have a larger share.

How do you allocate your marketing budget among different mediums?

In my career of about 20 years, I have seen how marketing strategies of brands change. We feel we are a niche brand that everybody cannot afford and we don’t want to sell everywhere. The electronic or mass media reaches everybody who is not our target consumer so we want to have directed marketing strategies rather than generalised marketing. As a brand we spend a lot on digital media and don’t want to do into mass media where there is lot of spill. We do a lot of investment on digital media, social network and PR. I think there is no point talking to someone who is not your customer and who will never be your costumer. Brands invest more than 50% on digital but we invest almost 90% on digital. You may not see us on mass media but our awareness is pretty high.

Does the demand for the brand differ in regions?

It does. Typically in India, for any fashion/ premium brands, the top cities contribute to its 50% of the business. These days, tier 2 cities in India are also developing very fast and we have quite a reasonable presence there. Our next set of stores will be in a combination of such mega cities and next 25 state capitals. North Indians have zero loyalty towards brands so if a brand can be established in South, West or East in India it can establish well. There, people will keep buying the same brands for lifetime and even their kids inherit that. In North, they want to try everything that is new. As soon as something new comes in, they will park you aside and adapt the new product. We are pretty strong in places like Mangalore, Goa, Vizag, Mumbai and Pune.

How has GST impacted your brand and the footwear industry?

GST as a whole is good. Talking about the footwear industry it has been good too. But for us, it has not been that good. It brought the whole brand under the 18% category, which was 5-6% before GST. For us, the movement is 5-6% to 18%. For others it has been from 12-13% to 18%. We as a brand, just like the industry, pay excise which is 9% of your MRP. So, post GST, we ended up paying more taxes compared to what we were paying before GST. We have not increased our MRPs and absorbed that.

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