American Eagle, Target, and other retailers follow Wal-Mart in opening labs in Silicon Valley
Retailers Take On Silicon Valley — SAN FRANCISCO (AP) — Software engineers wearing jeans and flip flops test the latest smartphone apps. Walls and windows double as whiteboards where ideas are jotted down.
Context & Ripple Effects
This story lands at the tail end of a three-year talent-war arc the corpus has tracked closely: Valley companies' broadened hiring push in 2010 (Silicon Valley companies look to hire), then the perk escalation of 2011 — meals, iPads, even office dogs — followed by the fight over interns as the newest battleground for engineering talent.
What changes now is who is fighting: Wal-Mart has opened a Silicon Valley technology lab and, per AP reporting on November 17, 2013, American Eagle and Target are following it west, moving retailers out of e-commerce bolt-on teams and into direct competition with software firms on their home turf.
First-order effects
- Wal-Mart, Target, and American Eagle are now bidding directly against Valley software employers for the same engineers, and each lab needs a local leadership hire before it can produce anything.
Second-order effects
- Rival retailers without Valley labs face pressure to open their own or accept second pick of mobile and app talent, pushing up compensation packages across the retail sector.
Third-order effects
- If the lab model holds, large retailers structurally become software operators — carrying permanent engineering payrolls and reorganizing merchandising and store operations around internally built digital products rather than vendor-supplied systems.
The trend: Retail is relocating its digital capability to Silicon Valley, turning a regional talent war between tech firms into an industry-wide competition that now includes the biggest store chains.