The company started looking beyond the clog almost three years ago. “We always knew this was a fad, that the lifecycle would reach maturity,” Groote explains. Holeys first tried offering collections–matching sets of flip-flops, bag and hat–but the approach didn't work with larger retailers because each item had separate buyers and was displayed in different parts of the stores.
So Groote got more methodical, analyzing Holeys' customer base. Most sales were coming from specialty stores catering to niches, not from shoe stores. “It was a good awakening for us,” she says. Kids represent half of Holeys' sales; gardeners and duty professionals, such as nurses and restaurant workers, are both loyal groups. She decided to focus on those three segments, along with what she calls the Let's Play leisure line, a category of women's beach and casual wear.
To cater to these vertical markets, however, she needed new salespeople who were well connected with relevant retailers, as well as people who could gain access into the larger chains, such as Sears and Home Hardware. So, last year, Groote led a restructuring, starting with the name change to reflect an expansion beyond holey clogs. She's revamped the sales force and brought in new distributors. The plan, she says, is to serve those select buyers with new products incorporating SmartCel foam–kids' backpacks, sun hats and bags–although comfortable footwear, from sandals to boots, will always be the company's base. The Coastal ankle boots, for example, were first designed for gardeners, but Holeys has added customized versions to its other lines.
Still, when sales slumped in the spring of 2007, it didn't immediately ring alarms. She was still projecting 30 per cent growth for 2008; instead, revenues plunged. She won't reveal by how much, but Crocs' sales dropped by a third that year. Ron White, who runs a footwear chain in the Toronto area, says retailers found the speed of the drop shocking, leaving them with mountains of unsold clogs. “It was like a light switched off.”
‘Big into planning'
Groote has learned a lot since her days as a footwear ingenue, and her talk is occasionally sprinkled with manufacturing arcana. But she's fundamentally a strategist who has relished navigating a rapidly growing company on its roller-coaster ride. “She's big into planning,” says Kari Yuers, the CEO of an industrial materials manufacturer in Vancouver who's part of a local entrepreneurs' group alongside Groote. Last year, Holeys laid off a third of its staff, and now has about 20 people, down from a peak of 70 working around the world. Yet, says Yuers, there are “no ruffled feathers.” “She's had to manage almost the complete restructuring of the business,” Yuers adds. “With her success and notoriety, it's tempting to not show your scars.”
It's easy to see that bit of steel behind Groote's soft, blond looks.
“I'm determined,” she says simply. She and her husband both work 10- to 12-hour days, and they like it that way. “We do try to take weekends off and, for me, on average, that means I work only three hours,” she says. Her goal is to grow Holeys into as big a business as possible, something she finds isn't a priority with many women entrepreneurs, who are happy to reach a level of success, then pull back to retain time for family. (Groote has no children, and Walter's, from his previous marriage, are grown.) “I think women place limitations on themselves,” she says. “The glass ceiling in many cases is in the mind of the person, not an actual limitation. I sometimes think women don't dream big enough, sometimes there's a lack of confidence.”
Groote is counting on the miracle foam retaining its draw for consumers, but it's unclear yet whether foam footwear will follow the trajectory of Earth shoes, a fleeting fad in the 1970s, or be more like sneakers, a category with seemingly endless opportunities for innovation. Catherine Cook, who runs Kamik, a boot manufacturer based in Montreal that's led the colourful rain boot craze, says, “People are looking for comfortable footwear. There's definitely an ongoing trend of easy-on, easy-off.”