Target

With unemployment high and consumer confidence low, retailers are getting more creative to lure wary consumers. Grabbing shoppers from rivals is no easy task, but merchants are making a stab at innovative ways, beyond price cuts and low overhead, to lure consumers. Merchants have little choice now but to boost sales to keep profits up.

Walmart's strategy is evolving, and would have evolved regardless of what managers are in place. "Taking merchandise out of the Action Alley and providing clear sight lines has been a successful strategy," Spokesman David Tovar said in an e-mail, but added, "We are constantly listening to our customers and some have told us they liked seeing the rollbacks on merchandise in the aisles. .... We have given more autonomy to our store managers to make the decisions on what is right for their customers."

More than 450,000 people filed new claims for unemployment benefits last week, as joblessness continued to hamper the U.S. economy and other new economic indicators reflected mixed signs about the recovery. The number of people filing new unemployment claims has fluctuated between 450,000 and 500,000 a week since January, on a seasonally adjusted basis. Although that is down from last year, it remains an indication of ongoing weakness, economists said. Other new figures showed that consumer borrowing fell again in May, suggesting that Americans remain nervous about the economy. June retail sales jumped 3 percent, though some analysts noted that

Same-store sales, excluding Walmart, saw a 3.2 percent gain in June, up from May's 2.7 percent increase, according to Retail Forward's monthly report for 31 retailers. Last month's increase also topped June 2009's 4.7 percent decline, evaluated without Walmart. "The June results are positive, but the recovery in retail sales will be challenged in the coming months as long as doubts grow among shoppers," says Frank Badillo, senior economist at Retail Forward. "And it's clear that the news from the Gulf to Europe is starting to affect the outlook among shoppers." Among the biggest gains: Nordstrom (14.1 percent), Zumiez (10.9

As Americans' love affair with shopping cools, retailers are venturing overseas in search of growth. Bloomingdale's and Crate & Barrel each opened their first store outside the U.S. in Dubai this year. Abercrombie & Fitch just opened its first store in London. Sears has begun shipping tools and clothing to 90 countries. Macy's is looking at going into China. And Target, the discount chain that for a decade has resisted Wall Street pressure to expand internationally, revealed this spring that it wants to open stores outside the U.S. and is looking at Canada, Mexico and Latin America.

Tired of waiting for spending to rebound on its own, retailers are taking matters into their own hands. Stores like Sam’s Club, Target, Toys “R” Us, Staples and Office Depot are offering unconventional promotions meant not only to attract visitors to stores, but also to get them feeling profligate.

Target plans to hold its grand opening for its first store in Manhattan, in East Harlem, on July 25. Target said the store would feature more space devoted to fresh food, everyday essentials and home basics geared for apartment living.

This fall, customers using Target-branded credit cards will a get 5 percent discount on every purchase at its stores. Gauging by the results of an eight-month test Target recently concluded in Kansas City, the company expects the program to drive a 1 percent to 2 percent nationwide increase in sales at stores open at least a year by luring shoppers to its stores more frequently to take advantage of the savings.

On day two of the Retail Marketing Conference in Orlando, Fla., last month, a panel of executives from Best Buy, Dell and 1-800-Flowers.com took part in a roundtable discussion on how their businesses have evolved their brand, e-commerce and marketing strategies to differentiate themselves from their competition through innovation.

Retailers have been plagued by issues; some have suffered from product misses, others from deep discounts, and everyone has been hurt by the decline in consumer spending. But one factor that has actually been a positive for the sector may now begin to put pressure on retailers. After a decade of a favorable sourcing environment, the cost of production is rising. Prices for cotton have nearly doubled over the last year, capacity in China is drying up and freight costs are expected to rise. And retailers, who have finally begun to regain their footing, will now be forced to up their prices to pass along some of the costs to consumers.