How can AI drive innovation in the home improvement retail industry? Just ask Lowe’s.
Founded in 1921, Lowe’s has grown during the past century from a single small-town hardware store in North Carolina to one of the largest home improvement retailers in the world. Today, Lowe’s operates over 1,700 home improvement stores and employs approximately 300,000 associates. With over $83B in sales in 2024, Lowe’s serves approximately 16 million customer transactions per week in the United States.
So, how will AI shape the plans for Lowe’s and transform home improvement? I recently asked this question of Chandhu Nair, senior vice president for data, AI, & innovation at Lowe’s. Nair’s mandate encompasses leadership of the firm’s data and AI portfolio, technology solutions, and operation of the firm’s AI transformation office as well as the Lowe’s Innovation Labs. In his leadership role, Nair reports to the Lowe’s chief digital and information officer Seemantini Godbole, who reports to the President and CEO of Lowe’s, Marvin Ellison.
As it relates to AI, Nair comments, “I am responsible for our AI transformation office. My mandate includes driving the overall AI strategy and change management for Lowe’s. Our goal is to be a truly AI-native company, driving growth in the next three to five years.” Nair knows the retail world well, having spent a decade working at Staples earlier in his career.
Lowe’s leadership recognizes that for the organization to fully take advantage of AI, everything begins with a strong data foundation. Nair explains, “It all starts with our data, which encompasses everything from data platforms to our data analytics and data science functions.” From a technology perspective, Lowe’s is focused on applying AI at-scale across its business. Nair comments, “At Lowe’s, it’s about building scale across all of our AI capabilities, which include generative AI, traditional machine learning, as well as deep learning.”
Organizing for AI Innovation and Transformation at Lowe’s
One of Nair’s areas of responsibility is for Lowe’s Innovation Labs, which are based in Seattle and Charlotte. Nair comments, “It’s a small team and what we look at is emerging technologies that can disrupt consumer retail, housing and home improvement.” He continues, “The idea is how do we take more general purpose or other industry vertical-focus technologies, bring these into Lowe’s, and apply these technologies into retail use cases to create value.”
This is how Lowe’s first began working with OpenAI. Nair explains, “We met OpenAI in early 2021, when nobody knew that much about them. We were experimenting with transformer models, and our data science team was working with OpenAI.” Nair continues, “I remember being asked, ‘Why are you signing up with a nonprofit?’ Of course, one year later, OpenAI introduced ChatGPT, and everything changed for us.”
“If you look at when our CEO, Marvin Ellison, and our CDIO joined about 7 years ago, we were very behind in our technology posture”, says Nair. “Our CEO jokes that we couldn’t print a e-receipt in the store.” He continues, “At that time, we undertook a massive digital transformation. Our technical debt had to be closed out. We had to get our data in place.” Nair adds, “We never want to be in that situation again. Our goal is to be tech forward. We want to look for what is coming ahead and lead the way forward.”
Defining a Long-Term AI Business Strategy for Lowe’s
Truly successful organizations know that they must begin with a long-term plan which establishes a vision for where they want to be in the future, and is driven by business objectives, not just reacting to the latest events and shiny objects.
“As part of the long-term growth strategy for Lowe’s, we wanted to make sure that we were driving our AI efforts to enable a total home strategy for the company,”, says Nair. “At our analyst and investor conference last year, we stated that rather than develop 1,000 use cases, we were going to focus on three guiding objectives:
- How customers shop with us.
- How we sell.
- How we work.”
“We asked the question, ‘How can we use AI to drive the best experience for our customers and associates which then drives both top line and bottom-line growth for Lowe’s’?” says Nair. He continues. “It was the simplest way to get the organization aligned with how AI could change everyday activities for our customers and for our associates.”
Nair adds, “Within our three guiding principles, we’ve prioritized our efforts based on the maturity of the technology, the size of the use cases, readiness for change and the dimensional risk, including brand risk as well as other business risks.” He continues, “Ultimately, this is an adoption game for us. It’s not just about technology. To achieve our desired outcomes, we must have change leaders who will drive adoption across the organization.”
Building a Change Management Culture Across Lowe’s
The greatest impediment that most organizations face in their adoption of AI, or with the adoption of any new transformational technology, has less to do with technology and everything to do with people. How do leading organizations think about making change and adoption easier across the organization for its employees?
“Our organizational plan assumes that our AI transformation is not just a technology build or data build, but that change management is a central focus”, explains Nair. He elaborates, “Of course we are still learning and evolving as we go. If you look at retail organizations in general, you’ll see that store operations and merchandising operations have really not changed in the last 30-40 years.” Nair continues, “What we have found is that having the right champion and the business leader is critical. If you think about AI efforts and use cases as 30% technology and 70% change management, the key to success is having the right business leader driving change management.”
“Successful transformation efforts must be business led. You have to have a business leader who signed up for the dollars”, explains Nair. “At Lowe’s, we find the right business champion and then build the business and technology operations to be successful.” He continues, “You need to bring everyone along for the transformation journey, from the over-optimistic, enthusiastic employee to the overly skeptical apprehensive employee, as well as those in the middle. That’s the reality.”
Introducing New Generative AI Tools to Assist Lowe’s Customers
To accelerate its AI transformation efforts, Lowes’s has developed an internal university and partnered with OpenAI and Google to undertake training and provide access to an enterprise version of ChatGPT. The objective is to enable Lowe’s employees to familiarize themselves and develop comfort using these tools without any expectations. Nair explains, “The intent is to elicit feedback and get over the fear. There has been a lot of excitement and a sense of possibility.”
“For our customers we recently launched our generative AI tool, Mylow, which is an AI-powered home improvement advisor,” explains Nair. “The AI tool is designed to help customers navigate the many questions that come with owning a home, from project know-how to how-to advice to top-rated product searches and more.” He continues, “Customers can ‘ask Mylow’ home-improvement questions and obtain real-time answers.” Lowe’s has also introduced Mylow Companion, an additional AI tool for its store associates aimed at improving customer service and speeding associate onboarding.
“For 250,000 store associates this is a start at a massive scale”, comments Nair. “We started slowly and drove to adoption as these tools started to create value and address our associate’s needs. Our customers adopted faster we expected.” He adds, “We are on a learning curve. Training programs are helping drive adoption along our AI transformation journey.”
Developing a Responsible AI Framework for Lowe’s
Responsible AI is an important priority for most organizations. This begins with the establishment of safeguards and guardrails to ensure responsible AI utilization. “Creating a framework for Responsible AI was a starting point for Lowe’s”, comments Nair. “We established an AI Governance Committee as part of the transformation office in partnership with our Finance, Legal, and HR organizations.” He adds, “We look at every use case from a model risk, data risk, and brand risk perspective before we move forward.”
Nair elaborates, “We built guardrails into our platform to detect what we cannot respond to, in addition to prompt interception and protection, and layers of application-level security.” He explains, “If somebody’s asking for a pet-safe weed killer, we have to make sure that the products that you’re serving up are pet safe. The AI governance team is responsible for creating and managing this framework, and no use case moves forward without their approval. This is a commitment that we made collectively as an organization.”
Preparing for an AI Future at Lowe’s
Reflecting on Lowe’s AI journey, Nair comments, “Having home improvement expertise at your fingertips is a new phenomenon.” He continues, “If you think about homeownership in this country, it’s moving from boomers to millennials with kids to Gen. Z’s who are digitally native. They are expecting this expertise to be at their fingertips because it is what they know.” Nair notes, “The power that generative AI brings is that you can now visualize a bathroom or kitchen design. Our customer can use this technology to create the best experiences.”
“I’m very grateful for our CEO, Marvin Ellison, who is our biggest sponsor”, says Nair. “He’s been a champion of our AI transformation efforts from the start. He sees the opportunity.” Nair continues, “Our transformation has been top down with board and senior leadership support at every stage. There is a thirst for knowledge to make our business better every day.” He adds, “Our fundamental belief is that AI can superpower every one of our associates. We are motivated to unlock the full potential of home improvement, recognizing that we still need human creativity to create the best product out there.”
Nair sums up, “Our AI journey is an evolution that is helping every one of our associates do their jobs better and easier and is enabling us to service our customers better. It’s exciting times for Lowe’s and exciting times for our customers!”