Macy’s is doubling down on artificial intelligence to better manage its inventory and streamline its supply chain operations, scaling up a successful pilot project designed to help the historic department store chain achieve its ambitious financial targets. As the retail giant continues to navigate a sweeping corporate transformation, executives believe that advanced technological integration will play a pivotal role in reaching the company’s goal of generating $235 million in supply-chain-related savings by the end of the year.
Tom Edwards, chief operating officer and chief financial officer at Macy’s, detailed the strategic shift during a recent earnings call with financial analysts. According to Edwards, the retailer is actively incorporating an advanced artificial intelligence tool into its core logistics network, a move that will serve as a cornerstone in ensuring the company has the right product in the right place at the right time.
The strategy involves transitioning a predictive technology test from a limited trial to a full-scale deployment across the enterprise. "We are adding an AI forecast overlay capability to replenishment, moving from pilot to broader execution to improve in stocks and deploy our inventory more efficiently," Edwards told analysts during the call. He added that the company expects to fully realize these supply chain efficiencies in the second half of the year, a development that is projected to provide a noticeable benefit to overall gross margins.
This technological pivot is a key component of "Bold New Chapter," a comprehensive restructuring initiative that Macy’s first announced in 2024. When the multi-year strategic plan was unveiled, leadership set a clear financial target to save approximately $235 million in supply chain and operational costs by the conclusion of 2026. To achieve this, the company outlined a massive contraction of its physical footprint, announcing plans to shutter roughly 150 underproductive store locations over the course of the multi-year turnaround period.
The painful restructuring effort extended far beyond real estate rationalization, directly impacting the company’s workforce. At the start of the year, Macy’s made the difficult decision to eliminate roughly 1,000 corporate and logistics jobs as it simultaneously culled its distribution infrastructure and store network. Despite these significant reductions, the company maintains a massive physical presence. As of August, Macy’s reported operating a total of 661 retail stores across the country, a portfolio that includes its namesake department stores alongside upscale luxury brands Bloomingdale’s and Bluemercury.
The push toward supply-chain optimization and cost reduction has also seen Macy’s make heavy capital investments in physical logistics infrastructure. In October 2025, the retailer reached a major milestone with the opening of a massive 2.5-million-square-foot fulfillment center in China Grove, North Carolina. The facility stands not only as the largest storage capacity asset in the company’s network, but also as its most technologically advanced fulfillment center, outfitted with high-performance automation designed to process orders faster and more accurately than traditional warehouses.
Macy’s heavy investments in both software-based artificial intelligence and hardware automation reflect the rapidly evolving role that emerging technologies are playing throughout the broader logistics and retail industries. Across the sector, companies are increasingly turning to automated solutions and data-driven forecasting to enhance operational efficiency, reduce labor overhead, and help businesses survive persistent economic headwinds. This technological reliance has expanded beyond backend warehousing and distribution, touching adjacent areas of retail such as customer personalization and automated returns processing.
However, Macy’s application of artificial intelligence is not strictly confined to backend operations, supply chain logistics, and inventory forecasting. The company has also integrated AI into customer-facing functions to improve the shopper journey, highlighted by the rollout of an AI-powered shopping assistant earlier this year.
Tony Spring, chairman and chief executive officer of Macy’s, outlined the company’s tripartite philosophy regarding artificial intelligence during the recent earnings call. According to Spring, the executive team views AI through three distinct lenses: driving revenue growth, materially improving both the worker and customer experience, and creating greater operational efficiencies while reducing structural costs.
"We have a number of pilots, a number of things that are proof of concept, and a number of things that are rolling out that are in those three buckets," Spring explained to analysts. At the same time, the chief executive emphasized that technological adoption at Macy’s is not intended to replace the human element entirely. "I think the embracement of AI also comes with the belief that humanity has a role within the retail business, particularly in the relationship selling that we do at all three of our brands."
