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Retailers fighting 'funk' every way they can

Ever since Container Store Group CEO Kip Tindell said retail is in a "funk," investors have been trying to get a fresh read on the consumer.

Back-to-school shopping and holiday preparations are already looming large as the all-too-important second half of the year approaches. Funk or not, retailers can't afford to sit back and wait for the tide to turn.

Consumers can expect to see aggressive prices, targeted promotions both online and in physical stores, and new strategies at stores this fall, all in the name of turning traffic into transactions.

Fendi is trying out a temporary "pop-up" store to attract a younger consumer in New York City. Bright colors inside the store feature neon signs to promote the #FendiSoho hashtag.
CNBC
Fendi is trying out a temporary "pop-up" store to attract a younger consumer in New York City. Bright colors inside the store feature neon signs to promote the #FendiSoho hashtag.

Office supply store Staples is hoping a 110 percent price-match guarantee will give consumers confidence that they are getting the lowest price possible at their stores.

"Everyone has a mobile phone in their hand these days, and they're able to check pricing everywhere they go," said Demos Parneros, president of North American Stores and Online at Staples. "We know back-to-school, we've been doing it for almost 30 years, but there just could be a day where an item is cheaper somewhere else and we just want the customer to know we're there for them, whether it's stores or online."

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Parneros said Tindell made a good point about there being a retail "funk," saying that he thinks it has more to do with the variety of ways consumers can shop.

"It's often difficult to understand traffic patterns in stores. Years ago, we thought weather drove traffic or special deals, big sale days, big traditional shopping days, but that's all changing. We're seeing a different behavior pattern from customers because they do have so many choicesonline, stores or the combination. I guess, I think what [Tindell] was saying is it's hard to put a finger on exactly what's going on," said Parneros.

In his comments, Tindell said that The Container Store had thought its sluggish sales, which began in November, were the result of weather and calendar shifts, but the retailer later realized it was more than that.

"While consumers are buying homes and automobiles and even high ticket furniture, most segments of retail are, like us, seeing more challenging sales than we had hoped early in 2014—so we're not alone in this," said Tindell, during his remarks in early July.

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Yet, The Container Store's online store traffic showed "meaningful improvement" in June, according to a research report from investment advisory firm Stifel. A 40 percent increase in unique visitors, year-over-year, on the company's website can be attributed to new initiatives such as home delivery options when buying online.

That's why retailers have to keep inventing new ways to promote themselves.

"Retailers are now able to go with their integrated and social media strategies to help fight this [funk]," said Jeremy Rosenberg, senior vice president, Digital Media with Allison & Partners.

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He cited efforts to use Facebook's buy button, which was just recently introduced; Twitter's work with credit card purchasing companies; and the Amazon phone as examples.

Though customer engagement online continues to be a challenge for some retailers, they can't give up entirely on reinventing how the customer is engaged in-store.

Luxury brand Fendi is trying out a temporary "pop-up" store to attract a younger consumer. The store, in New York City's trendy Soho district, is decked out in bright displays for its handbags. The shelving is customized to look like a vending machine. On the walls, there are neon signs promoting the "FendiSoho" hashtag, which is meant to build buzz about the physical store online.

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Integrating the online and brick-and-mortar pieces is critical for retailers to continue to attract and keep consumers coming back, especially as 73 percent of back-to-school shoppers are expected to research products online first but still make their purchases in-store, according to an ICSC-Goldman Sachs consumer tracking survey.

And that's the juggling act retailers are trying to balance as they interact with consumers in so many different ways.

"It might be they walk into the store; it might be they go online and buy something. They might have a question and so they get hit on Twitter and so they are going to have all these different channels and [retailers] do need to connect them all together and have a consistent strategy," Rosenberg said.

—By CNBC's Sabrina Korber

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