Crocs Ecuador arrived in Ecuador in 2009. They have 18 stores, spread over eight cities in the country, and their expansion plans include reaching Loja and Oriente, as well as opening distribution channels. Its commercial manager, Bernarda Barreiro, talks about the brand’s growth despite high tariffs on footwear imports and the impact of illegal trade.

How has the brand grown in Ecuador?

We are located in eight cities in the country with a wide geographical coverage (Manta, Machala, Portoviejo, Guayaquil, Quito, Cuenca, Ambato and Santo Domingo), plus our site e-commerce. This has helped us to grow and to be able to offer our product to all Ecuadorians. Every year we go with a very large growth, and the last year was with a growth of more than 20%. With several investments both in the opening of stores, as well as a very aggressive plan of remodeling the stores according to the new image that the brand has on a global level.

How much is the investment and what does that plan consist of?

The investment plan is about 800,000 dollars, which will be done in two years. We start in 2022, and we will finish in 2024. We have two sides to this plan, one is the opening of new stores, and the other is the scope of operations and the expansion of our current stores. For example, we just doubled the size of our store in Manta. All of these are very modern stores, with greater capacity for product display, which allows the customer better access to the product. We are in the process of remodeling our Mall del Sol store; we are remodeling in Cuenca; in Quito, Quicentro Sur; in Machala.

Crocs is looking to expand its coverage in Ecuador through its digital store

Are you planning to open more stores, in which cities would they be?

The plan is to open another store this year, we hope to succeed in Machala, we only have one there and it is a large market, with a significant number of residents, and if not, we can do it in Loja. We are looking at Loja, also a city in the east, and it would be like a direct expansion, but on the other hand, we are opening distribution channels to be present through third parties that have multi-brands. On the other hand, we are on our website, we deliver to 99% of the country.

Crocs Ecuador shoe model Photo: Courtesy of Crocs Ecuador

Have you thought about setting up a production facility in Ecuador?

Not. At the moment there are no plans to invest in a factory, that would be very good for us, but since it is an injection shoe, it requires a very high volume, so because of the size of Ecuador, such an investment would not be profitable.

On the other hand, trade is one of the biggest generators of employment in the country, there are many factories that employ less and less people every day due to technology. The trade runs customs, transport, insurance…, it is a gigantic chain and if you look at the shopping center it can employ more than 2000 people, as long as it is a legal trade, taxes are paid, it is a big contribution to the country’s economy. Buying where legal trade takes place is an important part and that’s where we put our grain of sand. Our taxes are high and it is important that we all do our part, not only those of us who import, but also those who buy the product.

In taxes, how much do they pay?

It is a flat tax of $6 and after that a percentage of the price of the shoe. Ecuador actually pays the highest taxes when it comes to footwear. We end up paying the price of the shoes up to more than 50% of the tariffs and it affects a lot. However, through negotiations, controls, costs and transport, we managed to improve the price conditions for sale to citizens.

‘As compensation for Yasuní, they are talking about a tax cost of 6000 million dollars. That cost is 0% VAT for food, medicine, universities. Don’t return VAT to pensioners any more’: Francisco Briones, Director of SRI

Have you done any studies on how the illegal trade affects you?

As it is illegal, there is no registry, the market is very difficult to control, but it is a huge loss for the brand. We work with intellectual property, customs supports us in controls, but we need more control, because even branded products are sold of poor quality, which harm the consumer, health and brands.

How much does Ecuador represent in brand sales at the regional level?

Ecuador has had great success in growth and governance at the regional level. We are constantly getting rewards from the brand but in reality we are tiny in billing because the population is small. I could not say the exact percentage, it is not information that the brand shares with countries, but Ecuador has about 17 million inhabitants and if we compare it with Mexico, Brazil, we are small and very important in general for Crocs and for all brands, if we see that the most important world brands are here.