Dive Brief:
- Macy’s Inc. is adding an artificial intelligence forecast overlay capability to its replenishment operations, according to a Sept. 10 earnings call.
- The implementation is part of the retailer’s initiative tied to strengthening inventory replenishment and “having the right product in the right place at the right time,” COO and CFO Tom Edwards said.
- The AI capability is currently moving from pilot to broader rollout in a bid to improve in-stock levels and drive inventory efficiencies, Edwards said.
Dive Insight:
Macy’s has been advancing on a three-point transformation plan that focuses heavily on its supply chain that was expected to drive $235 million in savings by 2026. Launched in 2024, Macy’s “Bold New Chapter” aims to improve end-to-end operations, including closing “unproductive” supply chain centers and opening an automated facility in North Carolina.
“In total, we expect to realize supply chain efficiencies in the second half of 2026, which will benefit gross margin,” Edwards told analysts during the earnings call. “Looking further ahead, we are confident we can build on these and other initiatives to drive revenue, improve the customer experience and reduce costs.”
Macy’s is entering the fall season in a good inventory position, Edwards said during the earnings call. Inventory was up 2.5% in Q2, in line with its sales growth.
Several retailers have been looking to optimize inventory management. Target is especially focused on making better inventory decisions, and has been exploring use cases for AI, machine learning and other technology within the process. For example, Target made a digital twin of its middle-mile inventory positioning system to improve product availability and reduce supply chain disruptions.
Meanwhile, Lowe’s plans to use AI to improve in-stock levels and analyze demand trends through an expanded partnership with Relex Solutions.
Kohl’s has also been adjusting its inventory management strategy. Earlier this year, the retailer said that it was identifying opportunities to make inventory depth and allocation adjustments. In March, Kohl’s said the inventory strategy changes were already reaping benefits, such as a smoother transition of its spring receipts.
