Alumnus Talks Key Strategies for Company Turnaround at Crocs

 

"We’re 2 ½ years into a five-year turnaround,” declared Bob Munroe ’82, General Manager of the Americas for the iconic shoe brand, Crocs. It’s a business fact of life that many once successful start-ups lose their competitive edge when transitioning to maturity, he told Marc Weinberger’s class, “Managerial Perspectives on Marketing Strategy.”  That pretty much described Crocs, which a decade beyond its founding in 2002 “had lost its identity; its profitability.”

A key ingredient in the present turnaround, he continued, was to replace “start-up talent with seasoned shoe industry veterans” who knew the navigational ropes of more mature markets. Munroe, who had spent ten years with Reebok, including a span as its president, certainly fit that bill. Since joining Crocs in October of 2014, his role as Americas head has embraced nearly one-half of the overall business, which includes 93 countries.

Munroe, in fact, has considerable strategic experience in both mature businesses and start-ups. After earning a marketing degree from Isenberg (where he met his wife, Erin, in Professor Weinberger’s class), Bob worked at Procter & Gamble, Johnson & Johnson, and Tambrands. Following ten years at Reebok, he led several start-ups—Multiple Energy Technologies, Mission Athletecare, and IdeaPaint.

A Repurposed Strategy for Crocs

A second ingredient in Crocs’ sea change was to shift the company’s market mix away from operating its own retail shops to wholesale and ecommerce—the latter which Munroe emphasized, has the greatest long-term upside for the company. “Sometimes when you go public, you do things that are more financially driven than brand driven,” Munroe told the class. After the company’s IPO in 2007, he continued, it went on a shop-building spree, emphasizing retail at the expense of wholesale, its biggest presence. Since the turnaround, Crocs has closed many of its 211 shops. “We’ll be down to 140 when we’re done,” he remarked.

With that emphasis, wholesale is growing at 10% annually. That goes hand in glove, Munroe noted, with dramatically improved processes in operations. “We were poor on supply chain; poor on wholesale distribution,” he told the class. “We learned from our wholesale partners that we had been dead last for five years in filling their orders.”  To turn that around, Crocs invested heavily in a new operations team and a new SAP system “that told us where inventory was.” Crocs is now among the top performers in meeting its commitments to wholesalers, he said.

“We have one of the most recognizable, iconic brands/logos in the world," added Munroe. “We want to keep it that way and expand from that.”  Crocs has systematically evaluated each of its product offerings, downsizing them from 2000 to 900 items (i.e., -40%). At the same time, the company has increasingly embraced fashion trends and added a diverse casual platform, including the City Lane brand (worn to advantage by Munro during his visit). Crocs, he said, has also launched a small “rain business” and is introducing a winter boot. “Our goal,” he told the students, “is to unlock the full potential of this brand.”