How Lowe’s is Renovating the Customer Experience with AI

By Daniel Pereira |  April 3, 2024

How does one of the biggest retailers in the US, $97 billion Lowe’s Companies, build a technology foundation that will let it create new offerings for both customers and employees?

That’s a key focus for Chandhu Nair, who joined the company in 2020. Nair, who has been an entrepreneur as well as a Senior Director at Staples, holds the lengthy title of Senior Vice President, Data, Analytics and Computational Intelligence & Marketing Technology.

In a recent conversation with Nair, he talked about how he sees his role: “The way I look at my role is more as a connector. I look to connect the dots between opportunities around customer experiences and business opportunities, and bring people together… That is really where I try to create value for the company.” We spoke with Nair about creating value, and developing a rational strategy for the AI era, as part of our recent research initiative, “How AI is Influencing Corporate Innovation in 2024.”

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What’s on your agenda in 2024?

Chandhu Nair, Senior Vice President, Data, Analytics and Computational Intelligence & Marketing Technology

As a company, Lowe’s has been going through a transformation over the last five years. The focus is really on our customers — who for us are our Do-It-Yourself (DIY) customers and our professional customers — and that focus remains the same this year. The early stages of our transformation were focused on modernizing our technological stack and ingraining innovation into everything that we do. And what I mean by that is: How do I break down monolithic legacy platforms into more “Lego blocks” that can be used to build different experiences? So we spend a good amount of time building out those Lego blocks, and that has enabled us to drive a lot of experiences. We just launched our DIY loyalty program, “MyLowe’s Rewards,” which is built on that very modernized stack, and leveraging a plethora of Lego blocks of services and APIs that we have built. 

The Lego blocks analogy suggests a design thinking ethos within the company. Is that within your group based on a tone you set, or is that company-wide?

It is company-wide. It comes from our executive leadership team, our CEO and CIO. So it is that tone that we set around design thinking from a technology or a systems perspective. Because you also have to think about the change management — the operational changes — as you drive adoption of these new technologies. After all, technology without adoption is not going to drive a better customer experience. So, whatever we are doing, we are focused on the best experiences for our customers or the best experience for the associates who serve our customers. So now you take that design and systems approach — and say, “Hey, these Lego blocks have to have both the technology strategy and the change management, and the talent strategy have to come with it as well.” So, that is how it is applied across the company.

In terms of priorities, it sounds like you’re considering both ease of use for Lowe’s customers, and internal scalability.

That is correct. Our goal is to become the number one omnichannel retailer in the world…  Most of the time [when] customers come to Lowe’s, it is more than just to buy a product. It is more “How do I fix my leaky faucet?” — and that may turn into “I’m looking to redo my kitchen and what does that look like?” So, for us, understanding that customer, understanding that customer’s intent, and what inspires that customer are the goals. What expertise is needed to complete that project, and at what cost, is super important, and how do I bring all that together into a seamless customer experience? Whether you are online or in-store, how do you have the app function as a hybrid that connects the dots? That is how we think about serving our customers.

With that, a good knowledge base for our sales associates is also a priority. If you go into a Lowe’s store, our associates will help you figure out if you are looking to replace your office refrigerator, and [they] need to be able to point to the newer version of the refrigerator model… We want to empower our associates with the same type of information that we are providing to help our customers source the right products and solutions for their project needs…

How is your mandate, your metrics, or your team make-up changing, if at all, in 2024?

We are constantly evolving as a team and a company. But I think we anchored ourselves on the “total home strategy” that we established a few years back, which is really around serving all things that you need to manage your home… What we have evolved since then is the focus on the customer.

In terms of the composition of the metrics, we use an Objectives and Key Results (OKR) framework, because there are a million things that we measure for a company the size of Lowe’s. [In our] annual planning sessions, we look at the OKRs, not just about the business and the financial outcomes, but we also [focus on] Lifetime Revenue (LTR) and our version of Net Promoter Score (NPS): What is the customer feedback? And what is the likelihood of the customer to recommend us as a retailer for home improvement? We anchor on those two OKRs… 

With AI and some of the spatial computing and some of the platform shifts that are happening, we are constantly looking at the marketplace to see what kind of talent we need…

Putting together a team composition with the right skill-set is one of the other challenges brought on by our approach… With AI and some of the spatial computing and some of the platform shifts that are happening, we are constantly looking at the marketplace to see what kind of talent we need to build the future home for our customers. 

How are you helping the organization move forward with AI experimentation and exploration?

Overall, as a company, AI is not new for us. I’ll go back to my initial comment that home improvement journeys are unique from, say, a typical retail journey… So for the question of how to fix a leaky faucet, or, “Here is a picture of a house magazine. How do I make my kitchen look like that?” If you think about these customer concerns, the need for both inspiration and expertise is where AI plays a significant role for us to unlock new types of experiences for customers.    

Learn more about this report, published in February 2024.

We have been working on AI for years. We have several AI products that are more analytical AI, which is focused on how I get the cheapest products with the fastest delivery to the customer… At the same time, what we are trying to evolve into this AI journey — especially with Generative AI and some of the advancements that are happening in this space — is to inspire our customers. How do I get the customer to visualize the kitchen they just saw in the house magazine? If you have questions on how to fix a hole in a drywall, how do I help you with all the products and everything that you need? 

So, [generative AI] is where we are shifting that journey… How do we shift the inspiration-and-expertise-driven home improvement journey on that path? For that, we are partnering with all of the state-of-the-art providers out there. And there is a horse race going on around who is going to “win” in the AI marketplace. And we are not in that race. It is not our concern.

I am not building the largest large language model, because I don’t think there is a need for us to do it…

We want to use the technology to build a better experience for our customers. I am not building the largest large language model, because I don’t think there is a need for us to do it, but we would use anything that would work best to create those experiences that I mentioned. So we are partnering with technology companies, and we are also bringing in the right required in-house talent to instrument this and make this come to life. So that is where we are on the AI journey. Last year was mostly about discovery and experimentation. This year is when I feel like we are starting to create value with some of these products being launched, both internally and externally.

What is one piece of advice you commonly share with innovators in big companies?

…Everything that you do in the innovation space, or the exploration space, needs to be measurable to a certain extent…

[You also need] to produce a change management plan and adoption plan before you produce the product plan. If you do not have these plans, you have not thought through how to build this product to succeed.

Make sure that anything that you do has a measurement framework. Be able to measure, be able to speak to those metrics. It is OK if something fails, but at least if you measure it, you can learn something from it, and then move on. Sometimes in the spirit of “moving fast and breaking things,” we tend to miss that step, which is learning from failures.