Part one of a two-part series
SAN FRANCISCO -- On the third floor of the historic Folgers Coffee Co. building, just blocks from the city's famed Embarcadero waterfront, Target Corp. is brewing up a storm, and it has nothing to do with caffeinated beverages.
Twenty- and thirty-somethings squint at large Mac screens, lined neatly on long rows of white, benchlike work tables. Scribbled equations and website server stats dot whiteboards and glass walls. A few beanbag chairs sit unused near the center of the room.
The office mirrors the hundreds of technology start-ups that occupy similar digs throughout San Francisco and nearby Silicon Valley. And that's exactly what Target wants for its new Technology Innovation Center, a skunk works-like building that can incorporate the look and feel of Valley-style innovation into its own corporate DNA.
It's among the latest attempts by Target and other traditional retailers to reinvent themselves in the digital age. They are spanning their efforts beyond just their websites and looking afar at ways to cook up the next must-have technology or innovation.
As consumers increasingly entrust their shopping needs to smartphones, tablets and social media, Target is rushing to recruit talent and creativity by establishing innovation colonies in Silicon Valley and other hot spots around the country. The need has become more urgent as store traffic and sales in the United States stagnate and online sales continues to climb each year.
"Retail is undergoing a major revolution," said Beth Jacob, Target's executive vice president and chief information officer. "Technology is key more than ever. It requires us to get comfortable with a test-and-learn [mentality] and innovate faster."
Over the past year, a small army of data scientists, software engineers and IT geeks has explored new technologies that might give the Minneapolis-based retailer a modern digital spin on the basic premise of selling merchandise in a store. Location may still be key to business success, but today's retailers must think of location in relation to a person's smartphone and tablet.