Kohl's (NYSE:KSS) has opened a technology-development office in Silicon Valley that will focus on process automation and building a new e-commerce site, the 1,100-store chain said on Monday (April 29). The new office, which is starting with at least 30 IT staffers but is expected to grow into its 52,000 square feet of office space, joins Kohl's design offices in New York and Los Angeles. The chain's headquarters is just outside Milwaukee, Wis.
It's hard to look at this Kohl's move and not compare it with Walmart's (NYSE:WMT) Silicon Valley outposts such as WalmartLabs. In each case, there's a perfectly respectable IT department that doesn't happen to be in a technology hotbed—with the implication that respectability isn't quite enough to generate cutting-edge ideas for in-store and online IT development.
That's probably not fair to the IT teams in Milwaukee and Bentonville, and it overstates the magic touch of Silicon Valley—WalmartLabs, for example, has produced hit-and-miss results.
But there's a reason apparel chains have New York design offices: That's where the designers are. In a similar way, Kohl's has at least one very practical reason to open an IT outpost 25 miles from Oracle's (NASDAQ:ORCL) main office: The chain is planning to relaunch its E-commerce site within the next few months using Oracle products, and when glitches show up, there are far more hired-gun Oracle experts available in that area.
Kohl's is also planning to start testing in-store mobile payments soon, and while having people in a high-tech hub isn't essential to get that working, many of those vendors are nearby, too.
Another advantage: Silicon Valley still tends to foster much more of an anything's-possible mindset, which can be a big advantage for tech developers in a mature industry like retail. The downside: Silicon Valley is full of revolving doors and ferocious competition for talent. Sticker shock and problems communicating with IT people back in the ordinary world are an occupational hazard.
That doesn't mean Kohl's can't be successful with its new office—just that those staffers (and their cohorts back at headquarters) will definitely know they're not in Wisconsin any more.
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