Target makes big IoT statement with 'Open House' shop

Target (NYSE:TGT) has made a significant leap into the Internet of Things with unveiling its "Open House" showcase in San Francisco last week. "Smart" is the byword of this interconnected home of the future.

The "new tech wonderland," as it was described by Re/code, features a nursery where as the baby awakens, the mother is alerted by a onesie with sensors. In turn, this switches on a lamp, starts the coffee maker in the kitchen, plays music and turns off the humidifier. The smart technology showroom is in a shopping center storefront below a Target store.

The 3,500 sq. ft. Open House demonstrates 35 Internet-connected devices, including an August smart door lock, a Ring smart doorbell, a Nest thermostat and a Sonos music player.

The showcase is part retail space, part lab and part meeting venue for the connected home tech community, according to Target's A Bullseye View blog.

"From a strategic perspective, we see Internet of Things as a megatrend on the horizon. We know it's going to generate huge value," said Casey Carl, Target's chief strategy and innovation officer, whose Enterprise Growth Initiatives team created Open House. "We're using Open House to test the trend, both for us and for guests."

This follows Sears' (NYSE:SHLD) opening of a connected solutions flagship store in Silicon Valley, which joins three Sears IoT shops in Chicago. Home Depot and Target also have connected home displays within stores. Also, Japanese e-commerce company Rakuten recently acquired Fits.me, which develops virtual fitting rooms, TechCrunch reported. This two-way technology allows online shoppers to visualize how items will fit them.

Target sees the IoT as an "impending megatrend" and a "multi-trillion dollar opportunity," Carl told Re/code. "We've been reliant on products and services and market expansion as our means of growth. Although those are great, we also have to be playing on other fronts to diversify our portfolio and make it far more defensible as a business model. Otherwise you can just get picked off from any and all competition over time."

Target now sells about a third of the devices shown in the Open House and hopes to introduce more. It also hopes the new shop will alert more of the IoT industry to Target's interest.

"The space is still largely B2G: business to geek," said David Newman, who runs Target's EGI team in San Francisco."It needs to be humanized."

While it is initially intended to educate, demonstrate and provide an opportunity for Target to learn about this new market, every device in Open House is also for sale. The retailer does not plan to replicate the shop elsewhere, but hopes to bring parts of it into the chain's stores.

"Putting a house in the space, we felt, was the most relatable and welcoming way to introduce these products," said Todd Waterbury, Target's chief creative officer, in the blog post. "What we're trying to do is humanize and personalize the benefits of these products, as well as show them working in concert. It's really about relevant storytelling and creating a destination for engagement and discovery."

For more:
-See this Re/code article
-See this Target blog post
-See this TechCrunch article

Related stories:
Target adding 'smart home' sections in stores
Target CEO Cornell places big bet on technology
IoT worth its hype; $1.2 trillion impact on retail predicted
Target to roll out RFID price tags this year
Ikea banks on Internet of Things as basis for 'Concept Kitchen 2025'

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