Target Open House is permanent part-museum, part-store environment that challenges the conventional definition of "retail."

Not only is it about an innovative subject (the Internet of Things), it combines an innovative strategy, innovative architecture, and innovative technology to introduce a comprehensive new paradigm for retail.

Smart devices are predicted to become a $17 trillion industry by 2020. However, no brand or retailer has effectively communicated their transformative potential in an emotional way, instead resorting to buzzwords and an alphabet soup of tech specs.

Furthermore, most big-box retailers like Target can't even engage IoT startups unless they can supply thousands of units, an impossibility when many are barely out of prototype.

That's an enormous missed opportunity, since some of those startups may have the next billion-dollar product like Nest.

Target gave Local Projects—a firm mostly known for museum design—a two-headed challenge: 1) design a permanent learning lab for exploring how to merchandise and market the nascent IoT category

2) engage founders and Target's experts in retail in a meaningful way by bringing them closer to customers.

Our research showed technology brands in particular suffer from a focus on features instead of stories that demonstrate solutions to recognizable problems. It's not the technology shoppers care about; it's the benefits.

Most retail environments are ruthlessly measured by sales-per-square-foot. In order to flip that model and focus on engaging and educating, rather than selling, we measured success by insights- and relationships-per-square-foot, as well as by how many IoT products were introduced chain-wide.

Most brands focus on selling just one product at a time, thus missing the real story of IoT. The connected home will only be life-changing when products work together—when a waking baby can start the coffee machine, or a door lock can trigger an alarm from the sound system after a break-in.

To do this, we needed to build an environment customers could recognize and project their own lives into. We needed to build a house.

Open House is a 3,600-square-foot space featuring a five-room home built entirely from transparent acrylic. Each wall was designed as a projection surface, transforming the entire house into an immersive theatre.

As visitors enter, their presence triggers a greeting from the products in each room. Then, they choose from a series of stories demonstrating how connected products solve problems like a kitchen fire or a restless baby.

Each animation is generated with live code and an API call to the products, which come to life as the story unfolds. Augmented by sound design elements like a baby's cries or a window breaking during a burglary, the experience reinforces the human emotion of each story.

After visiting the home and experiencing the big idea of IoT, visitors proceed to interactive tables for a hands-on experience with the individual products.

Research, design, software development, fabrication, and installation were completed in six months.

Open House debuted to immediate fanfare and become a must-stop for shoppers visiting downtown San Francisco.

More importantly, Target now has a funnel for going to market with IoT products based on data from real shoppers.

With new products constantly being introduced in Open House, Target will test over 100 connected devices in its first year. Of these, three have been confirmed as viable and are now available chain-wide: Tile, Petnet, and the Hello sleep sensor.

Finally, Target lept over its competition by forging exclusive relationships with scores of startup founders and hosting dozens of events engaging the public in essential conversations about security, reliability and the influence of connected devices. Target relocated a suite of veterans from headquarters in Minneapolis to maximize these opportunities.

Thanks to Open House, Target has a definitive competitive advantage in the largest market opportunity in a generation.