Best Buy is expanding into Amazon’s home turf.
The Richfield-based electronics retailer is opening a technology center in Seattle this spring as it looks to drive growth through innovation on its online and mobile platforms. In doing so, it joins a growing roster of retailers including Staples and Sears, as well as companies such as Facebook, that have been opening or expanding offices in Seattle in order to tap into the city’s wealth of tech talent.
And, yes, Best Buy will be just a couple of blocks away from the headquarters of rival Amazon.com Inc., too.
Best Buy’s 32,000-square-foot office will be on the top floor of the Seattle Times building, in the tech-centric neighborhood of South Lake Union. It will be the retailer’s first such office outside of Minnesota and will initially employ about 50 engineers, product managers and web developers. Down the road, Best Buy said it could have more than 100 employees there.
Mary Lou Kelley, Best Buy Co. Inc.’s president of e-commerce, said the company scoped out a number of cities, but felt Seattle made the most sense given its tech prowess.
“It’s a great fit with our needs and the next step of our transformation,” she said.
In the past two years, Best Buy has been rebuilding its digital foundation. To aid in that effort, it has relied less on outside consultants and boosted its in-house IT staff in Richfield from fewer than 50 employees to more than 150. It continues to work with several hundred contractors.
“We’ve done a lot of catch-up, and now we are ready to go,” said Kelley, adding that the Seattle office will help the retailer innovate as it looks to ramp up its digital tools.
As is the case with many retailers, Best Buy has been seeing big increases in online sales as consumers have become more accustomed to buying things from their smartphones and tablets. During the last holiday shopping season, online sales accounted for nearly 15 percent of Best Buy’s U.S. sales, compared with about 8 percent during the rest of the year.
But that growth spurt also has led to some hiccups. On Black Friday, one of the biggest shopping days of the year, Best Buy took down its website a couple of times after surges in mobile traffic nearly crashed its site.
As the digital revolution has disrupted the retail industry, many companies have been opening tech centers and incubators along the West Coast in order to grow their online operations. For a while, Silicon Valley was the place to go. Last year, Minneapolis-based Target opened a tech hub there after opening an innovation center in downtown San Francisco in 2012. And Wal-Mart, which is based in Bentonville, Ark., has its e-commerce headquarters in San Bruno, Calif.
“Best Buy is definitely late to the party,” said Carol Spieckerman, a retail consultant with Newmarketbuilders.
But she added that it’s probably smart for Best Buy to look to Seattle for its tech center since Northern California has been getting crowded.
At the same time, she said Best Buy was probably wise to focus on nailing the basics of its digital strategy before trying to take on too much.
“It seems like [Best Buy CEO Hubert Joly] doesn’t care about what people think if what they are doing is first or last,” Spieckerman said. “Now that they have laid that foundation, they are poised to rev up the innovation and for things to happen much more quickly.”
Best Buy will not be relocating any employees from Minnesota to Seattle. Rather, the jobs in Seattle will all be new positions.
The retailer’s new Seattle office will be funded in part by a $200,000 grant from the governor’s office in Washington.