American Eagle Outfitters (NYSE:AEO) has joined larger competitors in opening a San Francisco-area technology development center, according to the San Francisco Business Times.
Like the Bay Area tech outposts for Walmart (NYSE:WMT), Target (NYSE:TGT) and Kohl's (NYSE:KSS), the 10,000-square-foot office is intended to support the retailer's engineers, designers and digital marketing teams—and to come up with e-commerce and omnichannel ideas that aren't as likely to occur to developers back in Pittsburgh.
In American Eagle's case, there's another connection: CEO Robert Hanson spent 23 years at San Francisco-based Levi's before being hired by American Eagle in 2011.
For the most part, these newly created tech centers so far from headquarters don't seem to be showing much in the way of results. The obvious exception is Walmart's @WalmartLabs, which almost immediately started churning out a succession of online experiments. But that wasn't really a new operation when Walmart launched it in 2011—the retail giant just cobbled together several Silicon Valley startups it had acquired and largely left them to do what they'd been bought for.
That approach has the advantage that the tech talent and management are steeped in the Bay Area's entrepreneurial culture. And the fact that things have been so quiet from the other retail out-of-towners may reflect a problem that the chains will have to think carefully about as the tech outposts develop: It's very easy in the Bay Area to find some very good (and expensive) tech talent. But running a technology lab as if it's still in Minneapolis, Milwaukee, Pittsburgh or Bentonville loses half the value of being in a technology hotbed. If these Silicon Valley experiments don't start generating genuinely innovative retail ideas, they'll quickly become very expensive ways to spend IT budgets.
- See this San Francisco Business Times story
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