Digital Drives Crocs' Comeback

It wasn’t long ago that Crocs was a struggling brand. In 2009, an overall negative perception of the brand resulted in declining demand and an increase in inventory, which ultimately forced the company to cut jobs and close production plants. But 2018 was different for the footwear brand, with stocks soaring 105.5% in the last year and a number of celebrity influencers wearing the shoe – who doesn’t love a good comeback? I spoke with CFO Anne Mehlman this month to learn more about the company’s refreshed strategy, its commitment to pivoting around consumer trends and how having the right data makes it all possible.

Jeff Thomson: Before your appointment as CFO of Crocs, you spent five and a half years as a senior director and vice president of finance with the brand. What did you learn during that time?  How does that experience shape your vision as CFO?

Anne Mehlman: It was a great opportunity to learn the business and understand the brand. I was fortunate to be able to work in many different positions, from finance leader in Europe and our Americas regions to global treasury and corporate finance. When I first joined Crocs, we were building out retail stores and quickly expanding distribution, and then a few years later it became clear that we needed to change our strategy and I was able to work with the new leadership team on laying out the new strategy and resetting the business. Turnarounds are hard and they often take longer than you first expect, but it has been incredibly rewarding to come back and see all the team’s hard work pay off. Setting a clear unwavering, strategy, that people can buy into is very powerful.

Thomson: With the closure of many retail locations, e-commerce is now a critical part of Crocs’ profitability strategy. What is the difference between managing accounting and finance for brick and mortar stores versus e-commerce? What ultimately drove the company to shift strategy in this direction? What role did data analytics and consumer trends play into these decisions?

Mehlman: The consumer has been and continues to shift their purchasing behavior to digital channels. This is a global trend, even though different markets are in different places along this journey. This is a consumer-led journey and you need to show up where the consumer is shopping. This could be on our native site or another site that sells our product either through buying directly or through a marketplace model. In a traditional brick-and-mortar structure, you have a less flexible cost base and it is harder to quickly make changes when things aren’t working. The volume and velocity of data are what makes the e-commerce channel unique. Feedback loops are faster, and you can test and pivot much quicker. The important thing for finance is that everything is measurable – but you need to be able to harvest and analyze the information and partner with the commercial teams to provide measurable and data-driven insights to help drive the right decisions.

Thomson: In a highly-competitive online footwear space, how do you leverage technology and digitization to differentiate your product offering to consumers? How important is it for you to know your customer?

Mehlman: A big shift in our marketing strategy last year was to shift 100% of our marketing spend to digital. This is much easier to scale on a global basis, and it also allows you to target your existing customer base and potential customers in an efficient way. User-generated content is a good way to get to know your customer and drive engagement with the brand. Using technology to drive engagement and forge emotional connections with your consumer can be a differentiating factor, too.

Thomson: Technologies like artificial intelligence and automation are also transforming the finance function and back-office operations at companies like Crocs. What competencies do finance professionals need to succeed in this environment? What skills and personal qualities do you look for in members of your finance team? How well-prepared are college graduates for the new finance environment they must navigate?

Mehlman: Finance is evolving as the expectations of finance change. Much of the manual work that used to be done can now be automated. Pulling together a simple report or booking a journal entry used to, in many cases, involve pulling from a number of different systems and then using spreadsheets or databases to manipulate the data before it reached its final form. Now you can automate most of that without large technology investments. Now the demand is for people who can do this automation and then focus on analyzing the data and providing insights that really drive the business. The pace of change is extremely rapid, and it is important to be comfortable with change and new ways of accomplishing the same work. I look for people who have analytical skills, are problem solvers, are comfortable with technology to help automate processes, and have intellectual curiosity.

Thomson: Crocs has shown an ability to be malleable in its offerings and brand message. What fuels your ability to innovate on demand? How do you prepare your finance team to be able to provide the insights executives need in order to make shifts, as appropriate?

Mehlman: Crocs is a democratic brand and appeals to a wide variety of customers around the globe. We have great product and marketing teams that stay close to our consumer and trends in the market. They use social listening to quickly influence our product and marketing strategies and amplify messages or products that are working. Business partnership is very important for the finance team, by staying close to the operations, they learn the information that is important to surface to make decisions. Speed is incredibly important, so settling on KPIs up front that can be easily tracked and reported helps to make sure that you are on track to drive value.