The Best Parties II THE HOT PARTIES WWDSECTION BEAUTY HIGH POINTS 2012 THE THE TOP 10 STORIES RON JOHNSON: NEWSMAKER OF THE YEARYEAR MEMORABLE MOMENTSIN FASHIONIN MEMORIAM 2 WWD MONDAY, DECEMBER 10, 2012 SECTION II WWD.COM THE YEAR IN FASHION A TRANSFORMATION IN PROGRESS tings for updated merchandise from Newsmaker Jonathan Adler and Michael Graves, 2012 among other labels more apt to be seen in SoHo rather than a Middle American department store. of Shops-in-shop for Martha Stewart, the Carter’s, Cosmopolitan intimate ap- Year parel and Giggle baby clothes and gifts will also start rolling out next year. Stewart is abandoning Macy’s to sell at Penney’s, which says it will sell Martha next year, though a court battle over who can sell the brand continues. Ron Johnson Johnson regards Martha Stewart and other incoming big brands as magnets The J.C. Penney chief is reinventing the company. for more labels and customers. “It’s the By David Moin collection of partners that will change people’s perception of jcp, just like the iPod changed the perception of Apple.” There could be additional announce- ments on brands, though Johnson wouldn’t cite any possibilities. “We are open to everything. We want to be exciting. We don’t want to be limited. We look at ourselves as kind of like the next shopping mall, a land of specialty IT’S CHRISTMASTIME, sales are back image, forgoing suits in favor of will continue with the suggested price shops. Just like a mall, we want to bring down, retail analysts are second-guess- crewnecks even at heavy-duty investor format with its national brands going the best ideas to the customers.” ing the strategy, and Ron Johnson, the presentations. Similarities between forward. When brands have sale events Next year will also see the appear- casually clad, visionary chairman and what Apple has and what Penney’s at other retailers, Penney’s will honor ance of The Street, a half-mile-long re- chief executive officer of J.C. Penney strives for — a clean, service-oriented those temporary reductions so it can created main aisle through the store Co. Inc., is keeping his cool. and nonpromotional retail environ- remain price competitive. where customers can relax, check “I don’t feel any pressure exter- ment — are apparent. Smelling blood, rival retailers have their e-mails, sip coffee or juice and The long lumbering Penney’s had been pounding away at Penney’s mar- order via mobile checkout. The Street nally or from any investors. I am really ·· focused on rebuilding J.C. Penney,” no other choice than to remake itself ket share by becoming more promo- will also have the “jcp bar” for returns, Johnson told WWD. “We are not feeling for a better future. The company was tional and as coupon-crazed as ever. cash checkouts and pickups from on- any pressure other than doing the right seeing a sales slowdown and decline in “We knew this year sales would go line orders. It becomes the “interface” thing for J.C. Penney.” product quality before Johnson joined backwards as we established, if you for customers to visit Penney’s new And more than most retailers, he’s in 2011, and this year has endured will, a high-integrity pricing model,” shops, Johnson said. looking forward to 2013 when “the fun further declines. In the third quarter Johnson said. “It’s been a little tougher Another Johnson creation geared begins,” as many more products, brands ended Oct. 27, there was a $123 million than anticipated, but now we are three for Penney’s stores to be opened in the and shops emerge on the selling floors. loss, compared with $143 million in the weeks to the finish,” of year one, in future is called The Square, which he’s “This has been a very hard year. As year-ago quarter, and sales dropped Penney’s four-year reinvention. described in the past as “a dynamic hard as this year was, next year will be 26.6 percent to $2.93 billion from $4 bil- At the end of the process, Johnson seasonal space with unique items, light exhilarating, as we return to growth,” lion last year. Even Internet sales were will either be the hero for boldly rein- food and beverage and engaging expe- Johnson said. “Clearly this year we down, declining 37.3 percent to $214 vigorating and rethinking the $15 bil- riences” including holiday trim-a-tree depromoted. We lowered our base. areas that for the January-February Now we see what the customer shop- period would switch to activewear, ping patterns are. We know how to juices and Pilates and yoga classes. compete off a new base line. We expect Every two months the focus in The a return to growth next year. We really haven’t begun to update the Square will change, Johnson said. “Levi’s is wonderful. Izod is won- In fall 2013, Penney’s will unveil derful. It’s pretty remarkable that in assortments. Next year will be real fun. a prototype 130,000-square-foot store a few short months, you can see such that will “feel like a shopping mall,” profound changes,” he said of the re- Next year is when you will really be Johnson said. While it seems most of tailer’s new shop-in-shops. “But we the focus has been on brick-and-mor- really haven’t begun to update the as- tar reinvention, with digital shopping, sortments. That’s what happens next seeing the transformation. “stay tuned,” Johnson said. “We have year. Next year will be real fun. Next rolled out the ability to check out via year is when you will really be seeing — RON JOHNSON mobile. All stores have iPads. That’s the transformation.” been very successful.” Effective Feb. As far as being named WWD 1, “every employee will have an iPad. Newsmaker of the Year, it hasn’t quite million. Penney’s stock has nose-dived lion Penney’s business, or the goat who There are unlimited ways it can be sunk in. “I’m not sure if that’s a good from a high of $43.18 in February to a brought it down. used,” though no capabilities have been thing or a bad thing,” Johnson said, re- low of $15.69 in November, and closed “The transformation is on track,” announced yet beyond the checkout. sponding to the news. at $18.16 on Friday. Johnson said, in providing a progress Also on the tech front, Penney’s is It’s a good thing. Johnson has es- There also have been a few setbacks report on the business. Johnson added rolling out an Oracle platform over the tablished himself as a retail icono- on the management and marketing that 10 percent of the square foot- next three years with 60 percent fewer clast, willing to rewrite the rules of the fronts, with the sudden departure of age has so far been reinvented with applications than the current one, a game in his high-stakes reinvention of Penney’s president Michael Francis, a new shops, including Levi’s, Izod, Liz new digital platform for the online the 110-year-old Penney’s. In terms of short-lived advertising campaign with Claiborne and the jcp and Arizona pri- store; for spring, Penney’s expects to speed and scope, he’s leading a retail Ellen Degeneres and a pricing plan vate brands, and that reinvented space be fully RFID, and the store will go pa- overhaul of unprecedented proportions that originally confused customers but is outperforming the old·· space. It’s like perless, except for signs. — resculpting Penney’s prosaic sell- has since been simplified, though some a tale of two stores, or as Johnson put In New York, Penney’s has moved ing floors into a “specialty department shoppers who loved their coupons de- it, like a restaurant under renovation. into space in SoHo, on Lafayette and store” with ultimately 100 individual fected to other stores. Johnson won’t Imagine Penney’s as a restaurant with Broome Streets, where it’s recruiting specialty shops within the box, add- restore coupons, but is open to staging 100 tables, he said, where 10 new tables talent, most likely on the creative and ing better brands to modernize the mix an occasional promotion as evidenced have been brought in, but there’s been design sides, though Johnson declined while tossing out the dogs, and devel- by Penney’s Black Friday sale, official- no change in the menu as of yet. “Next to specify. Penney’s has its headquar- oping a cleaner, easier-to-navigate lay- ly the store’s only sale of the year, and year we update the menu and get to 40 ters in Plano, Tex., as well as a sourc- out with coffee stops, gelato stands and holiday buttons that can be redeemed tables. We will have 40 percent [of the ing center in Hong Kong and financial high-tech advancements for service. for a chance to win gifts are being dis- store space reinvented] as we move operations in Salt Lake City. He’s also introduced a controversial tributed through Christmas Eve. through next year. That is a big differ- Such projects as launching Joe everyday low “fair and square” pricing Meanwhile, Penney’s is working ence,” Johnson said. Fresh chainwide in nearly 700 stores scheme that eliminated coupons and harder to communicate to consumers The most anticipated addition is Joe within a week or two seem herculean. the high-low price promoting Penney’s its fair-and-square pricing by making Fresh, which in March rolls out inside “It’s hard.