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Those ugly Crocs – even Finns love them!

Kimmo Salmi, CEO of Crocs Finland, speaks proudly of the controversial comfy-clog shoe that has received press attention for its boat-like appearance and for the apparent dangers it has caused in hospitals and on escalators. Despite some negative press, the company is doing extremely well. In Finland alone sales figures have shot up to the six-digit range since its founding two years ago.

The Crocs story

Two Americans from Colorado launched the large and colorful slip-on clogs after discovering a similar type of shoe on a trip in 2002. They wanted to invent a different type of boating shoe that was not boring like the rest. They came across a very lightweight, resin material, known as Croslite, which molds to the shape of the foot. Croslite, the company’s trademark, is in all of Crocs products, including the clothing line which will be launched in October 2007 in some parts of the world.

The American company, based in Colorado, went public in February 2006 and since then shares have gone from $10.50 to an impressive $58.97 in August 2007.

The Finnish Crocs story

Could something so particular looking and flashy appeal to conservative Finns? As Kimmo explains, Finns can be picky consumers. He says they are “stubborn, skeptical and closed-minded, but once they like something, they are extremely loyal costumers.” The shoe weighs only 150 grams, is bright and cheerful, and very easy to take care of because of its water-proof material. It has become popular in hospitals, and playgrounds among all type of people.

In the beginning, Europeans did not take on to the far from elegant clogs. It wasn’t until 2006 when Crocs began to gain in popularity with the European market that Finns also started to catch on. In the early days of the company in 2005, Kimmo traveled around the country preaching the benefits of Crocs to the same customers time and time again, but often in vain. Finns didn’t fancy the “weird” shoes until after they became popular in Europe. It wasn’t until 2007 that the shoes really took off in Finland, probably because of Finns’ exposure to the shoe on their travels around Europe. In terms of figures, Kimmo says “we have expanded from a couple of hundred thousand euros to a couple of million euros range and will continue growing several hundred percent annually in the next three to five years.

Future plans for Finland

In September this year, the first store in Finland, the flagship store which has a product assortment of 40 shoe models, opened in Kämp Gallery in Helsinki. Crocs Finland, the daughter company of Crocs Europe which is based in Holland, expects to open two to five stores a year in Finland until 2009. After that the attention will be focused on the growth of those stores, each of which will sell about ten different shoe models.

Why should such a successful company spend time and effort to launch a product in Finland, a country so sparsely populated, when Russia, its giant neighbor, would surely be a more lucrative market? Actually targeting Finland is a way for many companies looking to enter into the Russian market start out, explains Kimmo. Finland as well as Estonia are the anterooms to Russia.

The strategy for Russia is just the opposite of how Crocs began in Finland and the Baltic countries, which will follow the Finnish model - that is have a one man agent prepare the terrain and then open stores in each Baltic capital in 2008. In Russia, stores will open before the actual distribution. In Moscow and St. Petersburg stores will be opened in 2008 and from there distribute to the rest of Russia. Estonia, Latvia and Lithuania will follow the same route as Finland. An Estonian agent has already begun to market the shoe to specific customers as Kimmo did in 2005 in Finland. It should be easier for him than it was for Kimmo as he will benefit from the Finnish experience.

A company should not think that Finland is an easy market, advises Kimmo. “Some products which have been a success in Europe have flopped in Finland. This can be avoided,” says Kimmo. The key to success is to properly create the brand’s image to markets like Finland, whose inhabitants prefer to dress in discreet colors such as black rather than flaunt their feet in multi-colored clogs.

Other important factors must be taken into consideration when planning to expand your company to Finland and eventually Russia, such as location, marketing and target customers.

“The company location in Finland should be carefully thought over, explains Kimmo, “especially if you plan on warehousing for Russia in Finland. Certificates to import products to Russia should be filed early enough so that it will not become a bottleneck when the sales infrastructure is established. Pricing is another matter, retailers are of course interested in their margins and therefore pricing should be made attracting for retail shop owners. You must turn to major chains in order to get a wide distribution in Finland. For us it took three years to get up to 350 doors selling our products. We’ve had to turn down many customers as well since we want to focus on being a well-recognized brand and therefore cannot include all types of shops in our distribution. We focus on specialty shoe shops, well-established sports shops and the best department stores. One can easily ruin the whole distribution if retailers end up in a battle between others and discounting your products.”

These words come from someone who knows what he is talking about.

Read more at Crocs Finland web site: http://www.crocs.fi/ (in Finnish)


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