With the new 3,500-square-foot Open House space in San Francisco, Target is attempting to accomplish a few things. It already sells roughly a third of the 35 Open House products in its retail stores, and ideally would like to sell more of the most promising ones in the future. Establishing an early relationship with these companies, the thinking goes, may give Target an edge when new ones are ready for brick-and-mortar retail.

The facility will also serve as a “welcome” sign to the Internet of Things industry as a whole, with the company hoping the space becomes a popular events spot for entrepreneurs.

Target believes it is getting in on the ground floor. Fewer than 16 percent of U.S. households with broadband had any smart home devices in 2014, according to research firm Parks Associates. More than 60 percent of households were totally unfamiliar with the category.

From the article "Inside Target’s Tech Funhouse and Search for Its Next Billion-Dollar Business" by Jason del Rey and Liza Gannes.

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