Macy’s said it will use AI to better manage its inventory after deciding to scale a pilot project that may help reach its goal of generating $235 million in savings by the end of the year.

Tom Edwards, chief operating officer and chief financial officer at Macy’s, said that they are adding an AI tool which will play a key role in “in having the right product in the right place at the right time.”

“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,” he said in a recent earnings call with analysts. “In total, we expect to realize supply chain efficiencies in the second half of 2026, which will benefit gross margins.”

The major retail player announced an initiative called “Bold New Chapter” in 2024, which included a target to save roughly $235 million in supply-chain related costs by the end of 2026. When the announcement was made two years ago, Macy’s said it was closing approximately 150 “underproductive” locations over the course of that period.

This restructuring effort also included layoffs. At the start of this year, for example, Macy’s announced that it was laying off roughly 1,000 workers as it culled its distribution and store network. As of August, the company reported it has a total of 661 stores, which include luxury brands Bloomingdale’s and Bluemercurcy.

In October 2025, Macy’s opened its 2.5-million-square-foot fulfillment center in China Grove, N.C., marking not only its biggest storage capacity, but its most technologically advanced fulfillment center too, which has high-performance automation.

Macy’s investments and restructuring efforts reflect the increasing role that AI has been playing in the logistics industry, which is expected to further enhance efficiency and help companies survive headwinds. It’s a bigger role that is also reflected in other adjacent industries such as retail and returns.

AI is not limited to Macy’s backend operations. It also uses AI in customer-facing functions, such as an AI-powered shopping assistant that was introduced in March this year.

Tony Spring, chairman and CEO of Macy’s, said the group sees AI in three parts, namely: driving revenue, improving worker and customer experience, and creating greater efficiencies and reducing 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,” he said in the recent earnings call. “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.”