When you change something by reshaping or altering it, you retool it. A candidate who's doing badly in the polls might try to retool his image before the election.
If an elementary school is getting dozens of new students, they may need to retool the classrooms to accommodate everyone. And, when new car models need to incorporate the latest safety features, engineers often have to retool their designs. Another way to use this verb is to mean "equip with new tools." You might, for example, retool your mom's basement workroom as a birthday present.