By Dan Primack
July 30, 2012

FORTUNE — In 2007, Staples (SPLS) founder Tom Stemberg partnered with Highland Capital Partners to raise $300 million for a venture capital fund that would invest in retail and packaged consumer goods companies. It has not gone according to plan, and the strategy is about to undergo some major renovations before Stemberg attempts to raise a successor fund.

The first big change is that Stemberg’s co-managing general partner, Ted Philip, plans to step back into a part-time advisory role. Philip will continue to work with existing portfolio companies and take new board seats, but most of his time will be spent at a Boston-based non-profit organization called Partners in Health.

Prior to joining Highland Consumer Fund, Philip had co-founded Decision Matrix Group (which acquired Yankee Group in 2004) and served as president of Lycos.

Second, the group plans to refocus all of its efforts on retail at the expense of consumer packaged goods. It seems the latter have not performed up to par in the group’s portfolio, with Stemberg believing (ruefully, it seems) that fund-based venture capital is not appropriate for such investments. It’s worth noting that Philip simply believes they picked the wrong consumer packaged goods companies, but since Stemberg is the one staying on full-time…

Finally, Stemberg says that the next Highland Consumer Fund will be marketed with a lower target than $300 million, although he declined to get into specifics. The current fund still has dry powder for two or three investments before its investment period expires in March. It’s possibly that Stemberg will try to secure some sort of bridge fund in the interim, but he and Philip both indicated that all efforts right now are on managing the existing portfolio and generating liquidity for limited partners.

Current Highland Consumer Fund portfolio companies include Lululemon Athletica (LULU), Pinkberry, City Sports, Guitar Center, O Beverages, Pharmaca and True Science.

It’s also worth noting that while the current Highland Consumer Fund will invest in tech-based retail, it will not do deals for tech companies focused on the retail space (management dashboards, mobile payment systems, etc.). Stemberg says that his concern with such companies is that each one has two or three clones/rivals, and that the ultimate winner is usually the one willing to sell its wares the cheapest to massive retailers like Wal-Mart (WMT).

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