global consumer

The latest webinar produced by WWD, “Notable Feet,” examined how customer-driven, digital product development has helped Crocs navigate market disruptions. The conversation, moderated by WWD executive editor Arthur Zaczkiewicz, featured Gretchen Jezerc, senior vice president of marketing at First Insight; Stacey Charbin, chief marketing officer at Centric Software, David Castellanos, manager product creation solutions at Crocs, and Ed Wunsch, global vice president of marketing strategy and insights at Crocs.

The goal of the discussion was to share insights on the “next normal” as it relates to everyone to come out stronger.

The conversation began with an industry update, assessing the state of the market, worldwide impacts and signs of recovery, and U.S. consumer response to coronavirus. Looking at numbers from the U.S., Charbin said “it’s no surprise to any of you that overall consumer spending is down. Apparel spending is down quite dramatically, but we believe this to be a short-term occurrence.”

Initial impact varied widely across industries with an 8.7 percent decrease in U.S. overall spending, there was a 50 percent decrease in apparel sales. At the same time, there was a 27 percent spending increase in grocery and some apparel and home goods. “Notably anything having to do with clothes that you would wear at home like lounge were also activities that you would participate in at home, like a home gym, gym equipment, home decoration, anything to make home life more comfortable,” said Charbin. “Anything related to nesting is proving very popular right now.”

Further, Charbin explained that while 250,000 stores closing in the U.S. has driven sales online, this has also meant some silver linings in the market. Particularly, she pointed out that consumers over 60 years old have shown unexpected engagement online. “All signs show that this is going to be a behavior that will stick over the long term,” said Charbin. “So, this creates opportunities for brands and retailers.”

To better understand future trends, experts are looking to China, the first to exit quarantine, asking if China could be our “crystal ball.”

According to Charbin, China is experiencing a V-shaped recovery or V-shaped curve, meaning there was a very fast drop in sales initially — 80 to 90 percent in consumer spending ­— but there has since been an increase of 10 percent in sales every week.

“One of the first dips in spending we saw was in luxury,” said Charbin. “But now growth is extremely strong. There’s a lot of pent-up demand that’s now playing out.” For example, Hermès experienced what was possibly the highest day of sales for a single store in China when they sold $2.7 million worth of goods upon reopening. LVMH also reported strong rebound sales in China since mid-March at Louis Vuitton, Sephora, Dior and Bulgari.

“But it’s not just luxury,” explained Charbin. “Consumers are also spending more on health and beauty items than ever before. Ready-to-wear is showing a comeback, with Nike reporting great results. Skechers just reported e-commerce results of 250 percent so far in the month of April. So, these results are phenomenal.”

Notably, Charbin shared that online engagement and the use of any kind of technology that allows people to shop from home or work from home remains very high in China. Meaning that although people are now allowed to return to work in the office, sales of products that make at-home life more comfortable are showing no signs of slowing down.

Meanwhile, manufacturing is also undergoing changes in China. “Due to the slowdown of consumption in Europe and the Americas, we now see some Chinese manufacturers that are shifting focus to the domestic market,” said Charbin. “However, this is also a crowded space so the other thing that they’re doing to reinvent themselves is shifting to a go direct to consumer and starting to launch their own brand.”

At the same time, there has been a large shift across the industry as a whole to innovate and stay closer to the consumer. “There’s a big push toward omnichannel. “This is evidenced by video conferences,” said Charbin. “One of the things that leading brands in China have done is live video conferences with VIP clients to show collections. They rely very heavily on social media and there’s been a 700 percent increase in brands livestreaming.”

To help companies stay close to the consumer, First Insight has conducted ongoing surveys of consumers throughout the coronavirus pandemic. In recent data, First Insight has found that consumers feel the safest shopping in grocery stores.

“This certainly could be because that’s the primary type of retailer were consumers have continued to shop even during the pandemic,” said Jezerc. “Shopping malls and department stores were named by the fewest consumers as the shopping environments where they feel safe when stores reopen.”

First-Insight-Data

Data from First Insight.  Courtesy Image.

Though safety in-store environments are just one concern as businesses plan to reopen. The fashion calendar and disruptions across the entire supply chain also remain top-of-mind. But it’s critical for businesses to maintain the connection with the consumer during this time and going forward.

One company that stands out for its digital platform, put in place over the last decade, is Crocs. The comfortable shoe brand has sold more than 600 million pairs of shoes to date and had record-breaking sales year in 2019 at more than $1 billion, making Crocs one of the 10 largest athletic footwear brands in the world.

Like all brands, Crocs faced challenges from COVID-19, including store closings in 90 markets. The company was able to keep shopping centers open to support direct-digital business. As protocols were put into place, shifting to work-from-home procedures, Crocs launched an initiative called “Share a Pair With Healthcare.” The initiative donated more than 500,000 pairs of shoes to front-line health-care workers and received positive feedback from both the health-care community and consumers on social media.

According to Castellanos, Crocs’ digital transformation has been focused on leveraging digital assets to reduce time to market, reduce reliance on physical samples, and streamlining the go-to-market process.

“These evolved in a long time in the making and were driven by four main factors at Crocs,” said Castellanos. “One is market disruption, both known and unknown, second is a need to accelerate time to market for speed-to-market in order to hit trend-right products when we deliver. Third is cost reduction and optimization. If data is up to date in real-time, collaborative space allows our business to make the best decisions with the data available. And lastly, get close to our consumers.”

In 2016, Crocs faced a brand perception problem stemming from polarizing memes and comments on social media. At that time, the company moved to improve through creating a loyal following with relevancy to grow the business.

“We thought it was critical to refresh out internal north star as all good things start from the inside,” said Wunsch. “We also knew that we needed to live and breathe our vision and values to authentically connect with our consumers.” In 2017, Crocs launched a new campaign under its new vision and values, called “come as you are.”

To further bolster the brand, Crocs entered into brand partnership collaborations ranging from a collaboration with Christopher Kane and Balenciaga to show the ability to embody expression, to collaborations with Post Malone and Luke Combs, who were both Crocs fans. To improve consumer connectivity, Crocs also launched an activation with Snapchat that saw one in 50 American consumers engage.

Looks from the Christopher Kane x Crocs collection. 

A large part of Crocs’ digital-first approach, the company also made holistic efforts to digitize its consumer insights for a better understanding of how to improve consumer relevance with its product offerings and community. To accomplish these goals, Crocs worked with First Insight.

Launched in 2007, First Insight created the space of “digital premarket testing of new products powered by the voice of the consumer.” Today, retailers and brands, including Kohl’s, Marks and Spencer, and Dick’s Sporting Goods, use First Insight to develop and launch products and inform product decisions. Very helpful to designers are the results of verbatim feedback on products within full reports.

“The full report is an inclusive ranking of products by value score, which is predictive of a product’s future market performance,” said Jezerc. This method was used by Crocs upon its pivot in 2016.

“First Insight helped us establish a focus on the fewer and more meaningful products,” said Wunsch. “Having the voice of the consumer across multiple key markets helped everyone get aligned to make more informed decisions, but ultimately facilitated us and creating a sharp cohesive focus on winning products that we share with our global regional partners, eliminating low predicted poor performing products and the cost and time of commercializing them.”

In the time of coronavirus, First Insight can aid companies in a similar way. “We’ve been seeing that a number of companies are attempting to conduct line reviews in Zoom meetings or Microsoft team meetings and a number of companies have been turning to us to get support in these kinds of data in order to inform much better decisions than holding up products on a Zoom meeting.

“We provide a distribution of demand by price point, and also guidance on initial price points and markdown cadence,” said Jezerc. “And a number of companies have been using this again and the current crisis to test existing inventory for potential repricing because frankly, consumers Value equations have been shifting during this time. And they need to understand what people will now and in future be willing to pay versus what they were six to 12 to 18 months ago.”

Today, Crocs shows an 11 percent increase in desirability and a 16 percent increase in relevancy since 2016.

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