New co-working space in Minneapolis' Linden Hills neighborhood focuses on retail innovation

After he left Target two years ago, Chris Walton spent a lot of time meeting people at Starbucks to talk about retail. So did Anne Mezzenga.

The two had worked together on Target's store of the future, one of the innovation projects that got the ax a few years ago as CEO Brian Cornell's team retooled its turnaround plan. Afterward, Walton and Mezzenga teamed on an edgy retail blog and podcast called Omni Talk, providing candid and sometimes provocative commentary on the retail world with a special focus on innovation.

"It was like, well, wait a minute, why isn't there a place to go if you're interested in retail where you can meet people and then you might bump into other people, too?" said Walton. "Especially when retail is such a pulse of Minneapolis. And we've always been an epicenter of retail innovation, with the first indoor shopping mall, Target, Best Buy, General Mills" and Mall of America.

So the two business partners teamed with Xenia Retail, a Minneapolis-based point-of-sale technology company, to start Third Haus, an 8,000-square-foot retail-focused co-working and lab space in the Linden Hills neighborhood of Minneapolis. The hope is to create a community gathering space for those in the retail and consumer packaged goods industry to congregate and share ideas.

With its recent opening, Third Haus joins an increasingly competitive co-working market in the Twin Cities.

The Third Haus concept is housed, symbolically enough, in a former Tuesday Morning store. It is set up with many of the hallmarks of a typical co-working space: sleek white tables, green hanging plants overhead, Wi-Fi, a printer, lots of outlets, coffee and, occasionally, cookies made by Walton's mom.

There's also a podcasting studio where Walton and Mezzenga record their weekly musings on retail news and interview those pushing the boundaries in retail. And there is a large open space they call the "retail experience studio" with display tables, mannequins and other fixtures where brands, tech startups and retailers of all sizes can experiment with how to merchandise and how to roll out innovative concepts in a physical space.

The lab includes internet-connected lighting donated by Signify, a division of Philips, that can sense when a consumer is near a certain product. And members can experiment with Xenia's mobile-checkout and scan-and-go technology.

Troy Stelzer, the CEO of Xenia, worked with Walton and Mezzenga on Target's store of the future concept. He wanted a space where they could continue to toy around with ideas and showcase his firm's capabilities. His six-person team in Minneapolis now works out of the Third Haus space.

"We spent the better part of a year interviewing and selecting potential partners" for Third Haus, Stelzer said. "Most are complementary to our platform. But some have aspects that are competitive to Xenia. We have to be OK with that and understand the friction makes us both better."

In the retail lab, there is also a lactation pod by Mamava, a Vermont-based startup whose mobile rooms for breast-feeding moms have been showing up in sports stadiums and airports.

The company, a partner in Third Haus, also is being tested in some stores. In addition to providing an appealing space for working moms in the neighborhood, Third Haus' leaders want to help retailers envision how they can incorporate such a concept to provide a better experience for shoppers and employees.

"Ever since Chris and I started working on the store of the future, we were thinking of mothers and the workplace," Mezzenga said. "Here, companies can think through about if this is going on a floor pad, if you're going to take up that real estate, how do you make sure it's merchandisable and how do you make sure it fits the brand."

The Mall of America, which like many malls is looking at ways to stay relevant and more digitally focused in the age of online shopping, has offered to cover 100 community-level Third Haus memberships priced at $15 a month, which would give those who apply access to the lab's events, workshops and exclusive content.

"We firmly believe in the strength of collaboration and look forward to working alongside Third Haus to promote retail innovation," Jill Renslow, a senior vice president of business development and marketing at MOA, said in a statement.

Other membership levels at Third Haus include a $60-a-month option that covers three drop-in co-working days a month and a $200-a-month option that includes daily co-working. They are also offering members discounts at the gyms next door — CrossFit Linden Hills and AQ Fit Lab, which Mezzenga owns with her husband.

GrocerKey, a Wisconsin-based startup with a handful of people who work in Minneapolis, has started using Third Haus as its local home base. On a recent day, an employee from Lululemon's corporate office was also typing away on a laptop while visiting from Vancouver.

Third Haus' leaders hope it will also become a popular spot for suppliers, consultants and brand representatives who travel to the Twin Cities once a month to have meetings with Target and Best Buy. And they think they can be an appealing option for the big retailers in town, noting that many of the people who have contacted them in the last couple of years are those working on new initiatives within those companies.

"This is the way to do experimentation," Walton said. "You can try to do it within your walls, but as soon as you do that, it's defined by how you think about things. So come out here and do it scrappily first where you can get out of your box. Which is what a lot of people are doing in New York or San Francisco. There's no reason we can't just do it here locally."

The plan is to then share — either through the podcast or special events — what Third Haus members learned through the tests and trials.

Some of the upcoming events include a talk by Walton on trends shaping the future of retail. Mezzenga has also launched a women's retail collective that will have happy hours and other events in the space.

Kavita Kumar • 612-673-4113