As more and more household products, from lights to basketballs, get an Internet twist, their manufacturers and the stores selling them now face a challenge persuading consumers they’re worth buying.
The phenomenon, known in the tech world as the Internet of Things, is designed to make items more useful by allowing certain functions to be controlled via the Internet — and it’s widely perceived as a big, shiny opportunity.
That’s one of the reasons Target Corp. on Friday is opening an experimental store in San Francisco called Open House. Inside the new-agey space, the Minneapolis-based retailer has created a mock-up house with acrylic walls that demonstrate for visitors how connected devices can be used together.
A smart door lock when you enter the house triggers music to begin playing, which activates a smart plant feeder that tells the homeowner if it needs to be watered. In the nursery, a sensor detects when a baby wakes up, which leads to lights turning on.
“This is a huge opportunity for Target,” said Casey Carl, Target’s chief strategy and innovation officer. “But the struggle of retail so far is that these products are pretty complex. We wanted to really try to demystify these products and show how they create value for consumers.”
The retailer will use the space in San Francisco as a lab to see how it might replicate some of the storytelling and customer education aspects in its 1,800 big-box store and on its website. Of the 35 products on display and for sale at Open House, only about a dozen are currently sold by Target. Some more could be rolled out chain wide depending on how they do at Open House.
“This is a learning lab,” Carl said. “There a lot of stuff that we don’t know how it will resonate.”
Carol Spieckerman, president of retail consulting firm Newmarketbuilders, said the project could be perceived as speculative. “But the bottom line is that it’s inevitable that connected devices are going to become mainstream and retailers have to get in on the game,” she said.
And the fact that the products require more education than selling, say, a tube of toothpaste, can actually be a good thing for retailers, she added, because stores offer something online-only retailers can’t — showroom space to display how the products work and employees who can explain them to customers.
“It’s the retailers that teach consumers to build a bridge to these solutions that will win in the end,” she said. “It’s a whole world of possibility.”
In early stages
Even though the controlling devices such as smartphones and tablets are widely used, the adoption of products that are considered part of the Internet of Things is still in the early stages. About 1 in 10 U.S. households already have some sort of smart home device while about 70 percent are unfamiliar with the products, according to a joint study by Park Associates and the Consumer Electronics Association.
In the last year or so, retailers like Sears, Wal-Mart, Target, Home Depot and Lowe’s have created dedicated spaces in their stores to display connected-home products. Similar to Target, Sears also recently launched a connected home store in San Bruno, Calif., that shows consumers how they can utilize the Internet of Things in various rooms of their home.
Richfield-based Best Buy has rolled out 80- to 100-foot connected home departments to nearly 700 stores in the last year or so. Blue-shirt employees at those stores have been trained on the products to better serve customers.
Work to be done
The technology is “pretty straightforward” but the trick is making consumers understand the benefits, said Anna Sandquist, the retailer’s director of connected homes.
For example, she noted that someone might not immediately understand why it would be useful to control the lights inside their home from their smartphone. But the store can remind them that it means they don’t have to come home to a dark place, while saving energy during the day.
While there is still work to do to make more consumers aware of the technology, Sandquist said Best Buy is excited about the potential for the category and is optimistic about industry projections. In the meantime, there’s no shortage of new connected devices angling for shelf space.
“There is a ton of stuff,” she said. “There are literally probably hundreds of products that enter the market every day.”
One of those newer devices is a baby sensor called Mimo, which launched last year. The product allows parents to monitor their baby’s sleep activity, breathing, body position and temperature from a smartphone or tablet. It is sold through Amazon and Babies R Us.
“There is a learning curve and there is a lot of consumer education,” said Carson Darling, the company’s co-founder. “But we can simplify a lot of it by having a great user experience.”
While Mimo is not yet sold in Target stores, it is a part of the retailer’s Open House experiment in San Francisco. Darling said he’s hoping to get feedback about Mimo from the lab to see how his firm can refine the product.
That’s one of the other aims of Target’s Open House — to help start-ups fine tune their devices to make even better products.
Target’s Carl said the retailer talked to more than 100 start-ups and pared down the initial number of products in the working lab to 35.
“There’s a lot more in the queue,” he said. “We’ll see what stuff really resonates with consumers.”
The 3,500-square-foot store is located below a CityTarget store at Mission and 4th streets in downtown San Francisco. It went into the space formerly occupied by a one-off C9 Active Apparel store that Target opened in 2012.
The tech office that Target opened in San Francisco a few years ago was heavily involved in creating Open House. The company will also use the space to host weekly talks, demonstrations and product launches for other start-ups in Silicon Valley.