Lowe’s innovates because it has to
Photo: Lowe’s

Lowe’s innovates because it has to

At last week’s Shoptalk conference, Kyle Nel, the executive director of Lowe’s Innovation Labs, detailed why innovation is so important for retailers, primarily because the current pace of change is exponential. And yet, survival on incremental technological change alone may be impossible.

Mr. Nel said that when a new and different technology comes out (speaking not just of Lowe’s), it inevitably disappoints, investment falls off, but then a core group continues to work on it. At that point, it’s hard to figure out exactly what to work on during the “deceptive disappointment” phase, before the new and different tech comes back to market in a better form and more successfully.

For Lowe’s, it’s about helping people love where they live and seeding the future. So, Lowe’s does live testing with consumers based on neuroscience to see what is “in flow,” or intuitive for consumers, and what is not in flow, meaning difficult and frustrating. Mr. Nel says humans are obsessed with stories as a way of digesting disruptive information, so Lowe’s actually provides ideas to sci-fi writers to spark narrative-driven innovation. And the innovation lab execs read comic books to help understand storytelling.

Some of the innovations Lowe’s Innovation Labs and its partners have created include:

  • The “LoweBot” – an in-store robot that can answer questions from consumers, take them to a requested item, and keep an eye on inventory issues. It is currently in test in San Jose, California.
  • The Lowe’s Holoroom is a virtual reality home improvement design and visualization tool that allows shoppers to design and place products in virtual rooms and then “step inside” them and move around wearing goggles. Using Google Cardboard and their smartphones, they can even “take” their newly designed rooms home with them. This concept is periodically in test in a number of stores. Another version with mixed reality, called “HoloLens,” has also been tested, working with Microsoft.
  • In-store navigation – an app and a Tango-enabled smartphone enables shoppers in a two-store test in California and Washington to get directions to items on shelves.
  • Virtual reality “how to” training – According to a recent report in Fortune, with the use of an HTC Vive virtual reality headset, customers interact in an in-store enclosure with a 3-D representation of, for example, a bathroom. They receive detailed instructions about how to install bathroom tile and the like. This is currently in test in a single store in Framingham, Mass.

While a number of tests are under way or have been completed, few if any have been rolled out chain-wide or even to a large group of stores.

BrainTrust

"Retailers should leverage innovation for their businesses, but only with clearly-defined business cases and use cases for the investment. "

Dave Nixon

Retail Solutions Executive, Teradata


"There needs to be a clear purpose and direction to guide innovation investments."

Mark Ryski

Founder, CEO & Author, HeadCount Corporation


"...the successful innovators will focus on the needs of the shopper first and cool technology second."

Liz Crawford

VP Planning, TPN Retail


Discussion Questions

DISCUSSION QUESTIONS: Should major brick and mortar retailers invest heavily in innovation labs as a way to experiment with new ideas, get creative, and find ways to rejuvenate the physical shopping experience? Which of Lowe’s innovations seems to have the most promise?

Poll

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Bob Phibbs
Trusted Member
7 years ago

As I wrote in yesterday’s post, Cognitive Computing Is Transforming Online Retail – Where Does That Leave Physical Stores?, what I don’t get is how online retailers are obsessed with every interaction point but physical stores aren’t.

I mean, how many retailers pay any attention to anyone coming into their physical store? Personalization is being human. It is great to have innovation labs if they have the goal to be more human. If they are merely a place to play with shiny objects — and not convert more shoppers to customers — they’re an expensive indulgence.

Dave Nixon
7 years ago

Retailers should leverage innovation for their businesses, but only with clearly-defined business cases and use cases for the investment. They should be cautious in building their own. There are plenty of great resources to partner, enter into a joint venture for or rent for this purpose! Innovation WILL rejuvenate the retail experience and needs to be a high priority discussion for every retailer.

Sterling Hawkins
Reply to  Dave Nixon
7 years ago

Right. Innovation for the sake of innovation doesn’t do anyone any good. Investment in innovation can and should be used to find new, better and more efficient ways to do things; however, only if they’re potentially viable in market. Lowe’s is smart in testing different technology in different stores so they can measure actual results and see how shoppers are responding before committing to further investments.

Dave Nixon
Reply to  Sterling Hawkins
7 years ago

Great point, Sterling …”pilot, test and tune.”

James Tenser
Active Member
Reply to  Dave Nixon
7 years ago

“Clearly-defined use cases.” Exactly! A DIY home center store has a special affinity for project visualization, planning, and how-to instruction. A shoe store not so much.

The “holo-room” VR setup at Lowe’s makes a certain amount of sense in that regard. So does a robot that can offer real help with locating a specific part or material. At the moment, however, neither solution can interact with large numbers of shoppers at a time. So it remains to be seen how much of a business impact is possible.

In testing these tools, retailers should take care to avoid the “not-invented-here” attitude that brought down many early dot-com initiatives. Just as you don’t want to invent your own online catalog or shopping cart platform, you don’t want to invent your own VR or robotics technology. Tech firms are lining up to supply these capabilities. Focus on the use case and purchase the technology that fits best.

Lowe’s may be more venturesome than most, but its innovation lab is collaborating with technology partners on both its Holoroom and LoweBot tests. That seems like good judgment to me.

Dave Nixon
Reply to  James Tenser
7 years ago

Key word: “Collaborating”… great insight.

Tom Redd
Tom Redd
7 years ago

Lowe’s should invest in people training and people selling — helping a shopper make a decision. Lowe’s has a few pros who know their processes in home repair and service. That is priority number one — not a Palo Alto robot that can display a YouTube video on doing tile. Anyone can do that. Get a real human to go through the tile process with the rookies.

Dave Nixon
Reply to  Tom Redd
7 years ago

How about an experienced sales associate showing a customer HOW to do it, using VR? NOW you have something! Download the tool list, steps and how-to videos for use when they get home.

Ricardo Belmar
Active Member
7 years ago

Innovation labs are important for retailers to help them rethink their stores as experiences to further differentiate them from online shopping. Lowe’s is on the right track with their innovative ideas, however, I question if all of these innovations are purely being considered for the store. For example, if they create a great VR/AR experience in their Holoroom or with their VR-based training solution, why not enable these within their mobile app for a home experience? From a brand loyalty perspective that seems like a winning solution to foster loyalty with Lowe’s and move customers away from Home Depot.

The real issue with innovation labs is that not all retailers can afford the investment. Most big box brands have the resources to do this, but what about specialty retailers? Many of them will not be able to allocate the budgets necessary for doing this in-house and will need to explore other options by either partnering with vendors or by participating in shared innovation lab “incubators” that operate independently but allow multiple retail brands to participate and share the innovation. New models such as these will be needed for many retailers to benefit from this level of technology innovation.

Mark Ryski
Noble Member
7 years ago

Yes, I believe innovation labs are an excellent way to generate new ideas and experiment. However, I would caution retailers to be clear about their core values and priorities. Having an “innovation lab” sounds sexy and progressive — and it seems many major retailers have them — but at the end of the day, there needs to be a clear purpose and direction to guide innovation investments.

Bob Amster
Trusted Member
7 years ago

Retailers traditionally have not been innovators when it comes to technology. It is long overdue and highly encouraging that retailers are investing in testing technology and concepts in their own environments. Eventually, those concepts that test well will be adopted by the industry as a whole. The important characteristic is that these concepts will have been developed by retailers, and in the retail environment, as opposed to solutions invented elsewhere looking for a problem to solve.

Harley Feldman
Harley Feldman
7 years ago

Of course Lowe’s should expend resources in innovation labs to experiment with new ideas to attract and retain customers — heavily is a relative term that management can determine. One of the things that always amazed me in the past was the lack of R&D being understood in the retail industry. All of the discussion in the past was about scale. The innovation lab is a long overdue investment in R&D for the benefit of growing and retaining a customer base.

The innovations with the most promise are the Holoroom and in-store navigation. The Holoroom should provide customers the best approximation in the store of what their refurbished room will look like before they make the purchase decisions and get home to find out what they bought does not meet their expectations. In-store navigation will allow customers to find items instead of having to find an associate to ask where an item is located and hoping the associate knows.

Ian Percy
Member
7 years ago

I try to live by one simple mantra: “What is possible?” The real trick is to understand where “possibilities” or “innovations” come from. Hint: they do not come from physical dimensional space. As I’ve said probably too often here, since the beginning of time certain people have found a way to see possibilities that most others can’t see. Sometimes it’s taken the rest of the world hundreds of years to catch up to those “possibility-seers.”

The truth is, if da Vinci, Jobs or Musk can do it, we can all do it. But the moment you set up an innovation lab you will almost certainly see the decline of innovation. We learned this back when we set up quality departments and everyone thought that now quality was someone else’s job. Innovation is now the responsibility of the lab. Everyone else can just carry on as usual.

Until we learn how to think differently about how our bureaucracies are set up not much will happen. Old structures cannot produce new ideas. Old skins have a way of ruining new wine. Look no further than our government … I rest my case.

Adrian Weidmann
Member
7 years ago

Innovation has become a buzzword and has become the destination instead of a journey. One of the unspoken secrets about retailers is that one of the key drivers to integrate technology is to replace and/or remove people — employees — from the shopping equation. Brick-and-mortar retailers seem to want to create a store that is nothing more than a mindless, bland environment where shoppers come into a 100,000 square foot distribution center and find what they’re looking for and leave.

Conversely, online retailers like Amazon are creating physical shopping environments that touch the shopper and create a seamless shopping ecosystem across all the channels that are available to the shopper — what many call omnichannel.

Yesterday I went into a Lowe’s and asked an employee where I could find electric baseboard heating. He quickly opened an app/website on his mobile phone and found what I was looking for BUT no location in the store. He was confused, asked one of his associates who did exactly the same thing — nothing! They both guided me to “heating stuff” at the other end of the store. I found nothing and asked another employee who quickly informed me that that the item was no longer stocked at the store but was an online purchase only! Another dagger into the relevance of brick-and-mortar retail as we know it! Why go to the store if that’s the experience?

If that’s your benchmark — bring on the robot!

Brandon Rael
Active Member
7 years ago

While innovation for the sake of innovation is critical for survival in today’s hyper-competitive retail landscape, the investments that Lowe’s is making need to be extremely strategic, with the end objectives being increased customer satisfaction and overall revenue acceleration. Lowe’s investments clearly put them at the forefront of the innovation curve, and that is certainly impressive.

However, the retail brick-and-mortar formula remains unchanged, as people desire an emotional, social and multi-sensory experience with the retail brand and their products. Having the right products, in the right place and at the right time, is the holy grail. You have a very formidable combination once you layer on Lowe’s associates who are highly trained, knowledgeable, motivated and are empowered by these technological innovations.

W. Frank Dell II
W. Frank Dell II
Member
7 years ago

Brick-and-mortar retailers have an advantage over online retailers and most don’t work it. The advantage is human interface. At one time all we wanted was associates to say hello to the customer and even look them in the eye. In big box stores, unless you shop them frequently, it is hard to find things and associate are either busy or off somewhere. Technology can solve this problem for a good percentage of the customers. Determining how to do something or how something will look can be done online, so retailers must take it to a level that cannot be duplicated on a 15″ screen. The goal is to free up associates so they can do what they do best, i.e., sell.

Lee Kent
Lee Kent
Member
7 years ago

I find that we often interpret innovation as meaning sexy technology and it is important to remember that is not always the case. The important thing for retailers is to understand their customers’ shopping journey and create great experiences that will have them coming back. These experiences may not involve a robot or even any form of technology but they will simplify or enhance the experience.

So yes, innovation is very important to retailers right now especially in improving the store experience and purpose but it doesn’t always have to be about tech. But that’s just my 2 cents.

Cathy Hotka
Trusted Member
7 years ago

Shoptalk was full of presentations urging definitive actions to increase customer engagement. The point, though, is to get innovation out of the lab and into the store. Actionable innovation can move the needle, and retailers need to invest a lot more.

Camille P. Schuster, PhD.
Member
7 years ago

Of course. We know consumers are changing and want different experiences in stores. Why would a retailer not innovate and experiment with new ways of doing things?

Larry Negrich
7 years ago

Walk into Lowe’s and you will see a large kiosk that is supposed to be a product locator. I believe it interacts with their app — I’m not sure as I’ve never been compelled to try out the process. I’ve never seen a person using it. I would imagine (and I don’t have a research lab in my office so I am at a disadvantage here) that customers don’t use this kiosk to find a product because 1.) It’s annoying to have to go through the screens; 2.) The customer doesn’t know what the product is called so searching is difficult; 3.) The customer is looking for a solution to a problem, not a product and; 4.) The customer hopes that by walking into a store they will receive some assistance or else they would have stayed at home and ordered the product online.

The ideas covered in the article all seem like overly-expensive ways to try to make Lowe’s appear to be an innovator while in reality offering little real value to their customer. For example, an expensive in-store enclosure utilizing VR for training to “install bathroom tile and the like.” Wow. There are thousands of YouTube videos that already do this and they are all free and a customer can watch from their phone — at home — eating donuts. So again I think Lowe’s needs to validate the shopper’s decision to visit the store with some service. Lowe’s can call this personalized, real-time guidance in an in-store virtual retail environment — it might placate the lab guys.

Ian Percy
Member
Reply to  Larry Negrich
7 years ago

Excellent, Larry. Your second point that the customer doesn’t know what the product is called is more central to this discussion than most imagine. You are the only one to mention it. I had the same problem trying to order a car part online and I almost always have it if I’m looking for the thing-a-ma-jig that goes between the whats-a-ma-call-it and the who-diggy. I typically take the parts I have into the store with me and ask someone to help me find the thingy that connects the two. No robot is going to help me with that!

Scott Magids
7 years ago

Recent media reports have described a “retail apocalypse,” noting the biggest wave of retail closures in decades. “Apocalypse” may be too strong of a word, but there’s no doubt a major shakeout is imminent and those retailers which are able to innovate and adapt to changes will be the ones who survive. Yes, brick-and-mortar retailers do need to invest in innovation — the strategy of doing the same thing because it’s always worked before is no longer valid. Not all of Lowe’s experiments will work, but that’s the point of experimentation. A common theme among all of their innovations, however, is that they appeal to a strong emotional motivator. People don’t just shop at Lowe’s because they need to buy spackle. They shop there because they have an emotional need to enjoy a beautiful home and they find it satisfying to do the work themselves. Those innovations that appeal to these motivators — such as the virtual reality “how to” training and visualization tools — will go a long way towards helping Lowe’s survive and thrive in the coming years.

Sky Rota
7 years ago

No! No need for any innovation at these stores. No one wants to spend time in them. The only thing Lowe’s, like Home Depot, needs is to actually have people working in the stores who are available and knowledgeable. You walk into these gigantic stores and have no idea where anything is. Then when you have a question, the workers say it’s not their department. My mom goes to Ace Hardware because they are smaller and have fantastic service, they help her from the front door and get her exactly what she needs in 20 seconds while I sit in the car. I don’t dread her going there. Plus when you go to Lowe’s you have to go back 14 times because they never ever have everything you need. They should tell you at checkout, Oh BTW you need light bulbs for that light! But they don’t!

Suggestion: If I was consulting for Lowe’s and Home Depot or any store like them I would have them make thousands of really good informative YouTube video tutorials on almost every item they carry and how to do everything possible from laying tile to getting the metal thing out of your lamp after you unscrew a lightbulb and it gets stuck in there. Every generation will be happy to watch those videos and purchase the products from them. If they actually have all the products to do the projects at home when they get there.

Spring Break this week. 🙂

Nir Manor
7 years ago

We are in a period of accelerated innovation in retail. The quantity and quality of retail tech innovations introduced in the last few years is a new phenomena in the retail industry, traditionally a conservative non-innovative industry. To survive, brick-and-mortar retailers must adopt new technologies while not giving up on the basics — customer experience, service quality, human touch, efficient checkout, etc. Retailers’ own innovation labs can be a source of new concepts to adopt within the retailers’ environment. A different approach can be to cooperate with external incubators or innovation labs that focus on retail tech. I believe that partnering with external innovation labs would me more efficient and would yield a higher value.

Liz Crawford
Member
7 years ago

Innovation labs are critical to the future of retail — they are the incubators of the Store of the Future.
But the successful innovators will focus on the needs of the shopper first and cool technology second. Let shoppers and their “jobs to be done” drive the process of invention. Otherwise, the initiative can become a solution in search of a problem.

Don Delzell
Don Delzell
7 years ago

I’m not sure I can whole heartedly endorse the ROI/business case approach to gating innovation. The reality behind innovation is that true innovation is almost impossible to associate with a valid and reasonable business case and rigorous ROI forecast. That’s sort of the nature of an innovation — something completely new. I also see what and how Amazon manages innovation and do not believe that the business case approach is a primary tactic. Of course, with seemingly inexhaustible capital and resources, Amazon becomes a model-breaker under any circumstances. Still, it may behoove us to think of innovation as requiring an innovative set of management principles.

Ken Morris
Trusted Member
7 years ago

Brick and mortar stores are looking for ways to compete with Amazon and their brick and mortar competitors. Personalizing the in-store experience is the best way to differentiate the brand and the shopping experience to attract and retain customers. With new technologies, retailers have a plethora of innovative ways to improve the shopping experience. The key is to find the right approach that appeals to your customers. Lowe’s approach to test several new technologies in real stores is a smart way to find the most effective method for their customers.

Not all customers like to shop in the same way. Some prefer one-on-one interaction with an associate and others want to be self-sufficient. And the self-sufficient customers even have different preferences, such as walking the aisles to find the products, searching on a mobile app, using a kiosk or robot, virtual reality, etc.

Of the Lowe’s pilot innovations listed above, the in-store navigation app is the easiest to deploy and will likely have an immediate adoption among a large share of customers. However, I applaud Lowe’s for their smart approach to identify the winning technology among the many shiny objects. While some of these technologies will be adopted by many consumers, retailers need to make sure they have alternate approaches for their key customer segments that have different shopping preferences.

The theater of shopping is what keeps people doing back to the store and Lowe’s has done this in a number of low tech ways as well. Their program with children called Lowe’s Build and Grow Kid’s Workshops are a great way to capture the mind and wallet of the next generation … they are savvy operators who understand the customer journey and the theater surrounding it.

Robert DiPietro
Robert DiPietro
7 years ago

Brick and mortar retailers typically have a web presence as well, where they test and analyze new ideas constantly. They should take the same rigorous approach to the physical store. I think they most promising idea for Lowe’s is Holoroom — the ability to step inside a remodel and experience it virtually will benefit the customer and help drive sales.

Kai Clarke
Kai Clarke
Active Member
7 years ago

Innovate or perish. That has been the key to success at retail since before Sam Walton. That shouldn’t stop for very aggressive, competitive retailers like Lowe’s or HD. Pushing the envelope really helps both the retailer and the category. “Why stop now?” might be a better question.

gordon arnold
gordon arnold
7 years ago

Big ideas cost a lot of money. This is a good thing if the idea actually improves the bottom line by increasing turn or margin for any reason(s).

A measurement method used to predict if an improvement will enhance sales is to judge if the improvement is unique to the criterion of a sale from a seller’s perspective as priority equal to the consumers. Providing high quality design and test methods for feasibility and or practicality studies is not a guarantee of capturing a customers business. It is simply a free shopping list that consumers exit stores with everyday to shop price and get delivery online. There are additional reasons for providing electronic design, product locator and information needs that may need addressing prior to your company’s future investments.

It is first necessary to accept and understand why retailers are in a frenzy to create productive hands-free information technology solutions to the consumer. Executive management is constantly reminded of the tireless work ethic and predictability of programmed machinery. These qualities when successfully implemented to a sales scenario save time, increase efficiency, turn and profits. Today’s executives are schooled to believe that the quickest path to endless profits is to mechanically automate all consumer needs. Pointing to the success of e-commerce companies, we see much support of this migration plan to eradicate associates from the floor as quickly as we can.

The question rarely asked and never answered is, are consumers going to the store to follow a robot, talk to an end cap or shop in a virtual reality booth? I don’t think so. But I’m just looking at lower and lower floor traffic numbers and higher and higher abandoned cart numbers in stores and online running parallel to lower associate populations.

A good first step in correcting these issues would be admitting to ourselves that computers are not artificial intelligence, they are tools like a watch or calculator. They can provide a lot of information quickly and when interfaced to machinery they can run faster, but that is all. There is nothing in them that thinks no matter what we are told. If they could, the executive and management teams would be first to go away — so says ownership/investors. The best people using the best proven technology throughout the company is the key.

Vahe Katros
Vahe Katros
7 years ago

Comic storyboard:

Frame 1: Jane sees a great outdoor idea on Pinterest and in the dream bubble she laments: “I wish Jim wasn’t so flakey, I know he could help me, oh well….”

Frame 2: Frank the local handyman laments to his friends at the barbershop: Speech Bubble: “Gee, I wish I could market my talents through Pinterest and Houzz, you know, like Uber … “Hey you, my truck is filled with tools and I just passed your house!” Oh well….”

Frame 3: Person in barber chair says: “Hey I’m with Lowe’s and I’d love to work with you on an idea, my name is Jack.”

Frame 4: Jack meets with others in the Innovation labs, he describes the problem and Justin blurts out: “I overheard you and went to GitHub and found this Ruby gem that works with the real Pinterest REST API. We can have a demo before lunch, are you Frank? I love your truck man.”

I’ll skip the remaining frames but a few things:

  • Great innovation solves the problems in the empty space, like a customers lack of skills around executing – and those things happen outside the lab so figuring a better way to capture those nuggets might be cool.
  • Also, innovation is a mindset that benefits from something like a lab — but it doesn’t have to be fancy, you can start now. It’s the people and culture that count. But they don’t have to be hipster Millennials, but they’re not such bad people.

Retailers don’t need to focus so much on robots but they should care about improving “real-world engagements.” And for that, having a place to jam and people who know how to jam can help work through ideas that happen everywhere. So less robot, more chatbot as in conversational commerce, as in, I wonder what will happen at the F8 Facebook developer conference in April. I hope to see your innovation team there, I’ve got some JavaScript to help you hang those cabinets.

Morgan Linton
6 years ago

Yes, I think that many major brick and mortar retailers have fallen behind when it comes to innovation, instead focusing a lot on things that will make only small incremental improvements. For many large retailers, finding a way to get consumers excited about coming into the store has become critical to survival.

While technologies like RFID provide great data for retailers, they don’t provide a better or more innovative experience for consumers. Couple this with the fact that large format stores are hard to navigate and AR offers a very compelling solution for consumers that’s both exciting because it’s new and innovative, and incredibly useful because it means they can shop a full store without the hassle of searching around something the size of a football stadium.