Lowe’s is rewiring store operations and last-mile fulfilment around AI and same-day promises, turning its network into an execution engine rather than a passive channel.
In Brief
- Lowe’s is redesigning stores as fulfilment hubs, with front-end layouts, replenishment logic, and labour models built around same-day and next-day service.
- Conversational AI now sits in the middle of customer and associate decision-making, shaping demand capture, project definition, and in-aisle execution.
- Same-day offers and free delivery are raising the cost-to-serve bar, forcing tighter control of inventory, transport productivity, and planning systems.
Where Lowe’s Operating Logic Has Shifted
The structural shift at Lowe’s is clear: store operations and fulfilment are being rebuilt around real-time promises rather than traditional replenishment rhythms.
Several decisions mark this change.
Lowe’s has put free same-day delivery on the table for loyalty members on orders over $25 and has extended same-day options to seasonal, bulky items such as mulch. It also claims next-day delivery and installation for major appliances in virtually every US ZIP code. These are not marketing offers; they rewrite how inventory, labour, and transport need to operate.
In parallel, the company has put AI in the hands of both customers and associates. The Mylow customer assistant now handles over a million inquiries a month, with users converting at roughly three times the rate of non-users. On the shop floor, the Mylow Companion tool has fielded more than 5 million associate questions since launch, with combined customer and associate queries running at about 2 million a month.
On the back end, Freight Flow 3.0 and full-shelf replenishment programmes are being rolled out to accelerate stock movement from distribution centres to shelves while improving in-stock performance and labour productivity.
Taken together, these moves indicate a pivot from stores as static selling locations to stores as AI-assisted, high-velocity fulfilment and advisory nodes.
How Same-day Fulfilment Is Being Operationalised
Lowe’s has not provided the full system blueprint, but the earnings disclosures point to several operating elements that any large network would need to put in place to support this kind of offer.
At network level, same-day and next-day promises require:
- Inventory that is positioned closer to demand, in the right job-lot quantities, and protected for rapid fulfilment.
- Store layouts that separate walk-in traffic from pick-up and delivery flows to avoid congestion and rework.
- Order allocation rules that decide in near real time whether a store, a distribution centre, or an extended-aisle partner should fulfil a given order.
- Transport capacity that can absorb high-frequency, low-drop-density runs without destroying unit economics.
Lowe’s is addressing these pieces explicitly.
The company has redesigned store front-ends to create smoother pick-up experiences for buy-online-pick-up-in-store orders and for drivers handling same-day deliveries. That redesign matters for labour and safety as much as for customer experience; it turns the first 20 metres of the store into a controlled dock rather than an informal handover zone.
On replenishment, Freight Flow 3.0 and full-shelf initiatives are described as speeding product from distribution centres to the sales floor and improving in-stocks. In operational terms, this usually means standardising delivery windows into stores, shifting more volume to roll cages or shelf-ready formats, and tightening master data around case-pack and location capacity so that product can move from truck to shelf with minimal handling.
Seasonal performance around the SpringFest event shows how this comes together. Mulch and similar categories are bulky, low value, and highly weather dependent. Offering free same-day delivery for these products in peak weeks multiplies handling and transport touches. Lowe’s links the event’s success directly to the supply chain keeping product in stock and to the use of these same-day offers, which implies coordinated planning between merchandising, network operations, and store teams on volume, space, and fleet capacity.
Appliances are another stress-test. Around 70 percent of appliance transactions at Lowe’s are described as duress purchases. Next-day delivery and installation on this base demands integrated scheduling, installation labour planning, and equipment availability. It also elevates failure costs: a missed appointment carries a high service and reputation penalty. The statement that this capability is available in virtually every ZIP code indicates that scheduling logic and installer routing have become core supply chain assets, not peripheral service functions.
AI as an Operational, Not Experimental, Layer
Mylow and Mylow Companion are not presented as pilots. The volume of queries and the effect on conversion show that AI has moved into the operating fabric.
For customers, Mylow sits at the front of demand capture. Handling over a million inquiries a month and tripling conversion among users means that the assistant is shaping not only basket size but project definition. In practical terms, that influences which product combinations are chosen, how complete projects are, and how predictable the ensuing fulfilment work becomes.
For associates, Mylow Companion functions as a roaming knowledge base. With more than 5 million questions asked since launch, it is doing several things operationally:
- Compressing the time needed to train new hires on large assortments and technical categories.
- Standardising answers to specification and installation questions, reducing the risk of incorrect sales and returns.
- Allowing experienced staff to cover more ground by resolving queries faster in-aisle instead of escalating or walking customers to other departments.
Behind the scenes, Lowe’s states that AI tools in its technology team have already delivered double-digit productivity gains in development and code review. More importantly for operations, capital is being allocated to embed AI and analytics into demand planning, allocation, replenishment, pricing, and promotion platforms. The company links these investments to its productivity programme, which is targeted to deliver a meaningful cost offset in 2026.
In operational terms, this kind of shift typically requires:
- Clean and governed master data on SKUs, locations, and customer segments.
- A planning cadence that can absorb AI-generated signals without destabilising inventory and labour plans.
- Clear guardrails around price and promotion recommendations so that margin and brand thresholds are protected.
Lowe’s comments that it is already seeing benefits from these systems, although it does not quantify forecast accuracy or stock-out changes.
Using Extended Aisle To Separate Assortment From Inventory
The Pro Extended Aisle programme illustrates how Lowe’s is decoupling range from physical stock.
Pro Extended Aisle is described as a multiyear build-out that allows Lowe’s to extend product offering and delivery capabilities without adding inventory into stores. It is positioned as a contributor to another strong quarter in Pro sales.
In practice, this means a virtual catalogue that connects Pro customers to a wider supplier base and additional SKUs, with orders often fulfilled directly from vendor or third-party locations. For network design, this has three implications:
- Store backrooms can remain focused on higher-velocity, higher-certainty items, easing space and handling pressure.
- Working capital is protected, since the company does not have to hold slow-moving or specialist Pro SKUs in every branch.
- The planning system must treat extended-aisle items differently, with lead-time, availability, and service levels driven by partner contracts rather than internal stocking policies.
Home Depot is on a similar path with its own Pro platforms, integrating specialist branches and a large fleet into one view of capacity. The difference in Lowe’s case is the explicit link to an extended-aisle concept tied into its Pro digital tools and quote generation, underlining that assortment expansion is being handled as a data and orchestration problem rather than simply a buying decision.
Balancing Service Ambition With Cost-to-serve and Margin
The combination of free same-day delivery, expanded Pro assortment, acquisitions, and AI investment carries a clear cost profile.
Gross margin in the quarter was 32.7 percent, down 70 basis points year-on-year, primarily due to the dilutive impact of the FBM and ADG acquisitions. These B2B distribution businesses carry structurally lower gross margins. SG&A, however, leveraged 17 basis points to 19.2 percent of sales, supported by productivity initiatives. Adjusted operating margin dipped 43 basis points to 11.5 percent.
Management is open that second-quarter operating margins will be pressured by the acquisitions, investments in sales-driving actions such as fulfilment offers, and higher transportation costs from fuel and commodity inflation. The response is to lean further into productivity initiatives in the back half of the year and to negotiate with vendors and logistics partners on cost sharing, including in resin and plastics categories sensitive to oil prices.
Inventory management is being used as an additional control point. Total inventory at quarter-end was $18.4 billion, up $112 million, but this includes about $500 million from the FBM and ADG acquisitions and inflationary tariff impacts. Excluding these, the company reports that inventory is lower year-on-year, driven by SKU rationalisation and productivity work while maintaining strong in-stock levels. This indicates tighter SKU policy and allocation logic, with non-performing or low-velocity items likely being reduced or removed.
The acquisitions also add procurement scale in drywall, steel, and insulation, which Lowe’s is already using to take cost out in these categories. Over time, that scale can support both the retail and B2B offers, but in the short term it increases complexity in sourcing governance and category planning.
What This Operating Model Now Enables
Lowe’s supply chain and store operations are being refitted around speed, AI-supported decision-making, and asset-light assortment expansion. Same-day and next-day fulfilment are no longer isolated capabilities; they are the organising principles for how stores are laid out, how inventory moves, and how labour is deployed.
Conversational AI has moved from experiment to infrastructure, mediating a significant share of customer and associate interactions. That gives the company a new lever over project definition, upsell, and service consistency, at the cost of higher dependency on data quality and model governance.
Extended aisle and B2B acquisitions decouple growth in range and Pro reach from proportional growth in store inventory, but they raise the bar for orchestration across internal and partner networks.
The trade-off is explicit margin pressure in the near term. Free same-day offers, transport inflation, and lower-margin distribution acquisitions all weigh on gross margin. The response is to drive productivity through AI-enabled planning and replenishment, SKU simplification, and procurement synergies.
The result is an operating model that favours speed and share capture in a flat market and relies on disciplined cost and inventory control to hold margins within a narrow band while that shift beds in.
