Target's new elves have a story to tell

Ever since Brian Cornell took the top job at discount retailer Target, his stated goal is to try to get the company's "cool" back.

To that end, there have been star-studded events to promote exclusive merchandise, a fashion collaboration with designer Joseph Altuzarra that launched to rave reviews, and now a partnership with Manhattan boutique, Story, to usher in the holiday shopping season.

Only timeand saleswill tell whether these steps will help Target get its groove back, but it is clear Cornell is certainly open to trying new things.

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His latest experiment sprang from a visit to a store in New York's Chelsea neighborhood, close to where his daughter lived, and it's all about building buzz about Target during this critical shopping period.

In the past, Target has turned to temporary "pop-up" shops as a way of promoting its brand, but Story, while it could be likened to a pop-up concept, is not. The retail concept store itself has a permanent lease in place and the items sold are curated like a magazine or a gallery exhibition.

In this way, the store tells a new "story" every eight weeks when the items it sells switch out, according to Story founder Rachel Shechtman.

STORY boutique
Source: CNBC

Story earns money not just through the products it sells but also through the fees it collects from its partners. Sponsors of a "story" can pay $75,000 to $500,000 to participate, depending on the level of service Schechtman provides. For example, the partnership can be used as a laboratory of sorts to help the companies' research and development, or it can be used to create content or to launch a new product.

A mix of holiday gifts

The store's latest theme is Home for the Holidays. Shechtman hand-picked nearly 200 items from Target's holiday gift assortment and mixed them in with products curated from 180 other brands available in the store.

Shechtman said her method "brings discovery to life in a very democratic way," both for consumers and brands.

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"When we talk about what we do [at Story] it's really experience per square foot not sales per square foot," Shechtman said. "'Holidays' is about lots of gifts for lots of people, so for this one, all of the stories are told in the form of bios, in the form of gift tags."

And if past Story openings are any indication of future sales, Target may have a home run for the holidays. While Shechtman won't reveal sales figures, she said revenue has grown every year since she opened in 2011. During her "Cool Story" opening this summer, when she partnered with General Electric and Quirky.com to launch the Aros Smart Window air conditioner, the store managed to achieve the highest sales per square foot in the country, on an adjusted basis, compared to a single Home Depot store.

Rachel Shechtman
Source: CNBC
Rachel Shechtman

Shechtman's focus on the customer experience rather than sales is a trend other retailers are realizing is paramount in connecting with consumers.

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"You have to think about the experience as part of your business and particularly for this millennial generation who are much more experience-oriented than perhaps their parents were," said Ron Frasch, operating partner with private equity firm Castanea Partners and former president of Saks Fifth Avenue.

Experiences for retail can be as simple as offering food to shoppers or the more elaborate decor Shechtman has chosen for Story's "Home for the Holidays" event, which she hopes will evoke the feeling of being in a mountain retreat, complete with wooden beams, a working fireplace and the aroma of pine to get shoppers in the holiday mood.

"We love that Story takes an entirely different approach to retail, and we were really intrigued by the idea of Rachel weaving her favorite Target products into Story's holiday concept," Cornell said.

A surprise visit

Terms of Target's partnership with Story weren't disclosed.

The partnership between the companies began eight weeks ago, when Cornell approached Shechtman at the boutique. She had no idea who he was.

"I was wearing sweatpants when I met Brian," she told CNBC. "I was embarrassed at the time, but maybe I should wear sweatpants more often."

Cornell said the partnership is "a great testing ground" as it explores how presentation and experience impact Target's guests.

"Home for the Holidays" is open now through Jan. 4.

—CNBC's Courtney Reagan contributed to this report.