Inside Macy’s Network Investment in AI and Automation
Bold New Chapter proves Macy's can execute, but can it reinvent?
Macy's has been deploying AI across fulfillment, demand planning, personalization, and customer support since 2024.
Their "Bold New Chapter" turnaround, now nearly two years into execution, combines a $640 million robotic mega-hub, cloud-native IT modernization, and strategic generative AI experiments. The early results are encouraging but the executives still think that the hardest part is up ahead.
When Macy’s CEO Tony Spring addressed retail strategy in 2025, he stated technology’s role in the company’s turnaround. "That has to do with embracing the power of AI as well as generative AI, that had to do with making sure that we were taking costs out of the network. In some cases, also speeding up the delivery of product to customers where we were behind the competition,” Tony said.
The statement captures Macy’s AI agenda in plain terms. Cut costs, close the fulfillment gap with faster rivals, and use intelligence to serve customers better.
The most measurable of Macy’s AI investments is in fulfillment operations. The $640 million China Grove, North Carolina facility is the company’s third automated fulfillment center and its most advanced.
It deploys mobile robots that shuttle inventory to human pickers, ASRS towers that maximize vertical storage density, and a cloud-native Warehouse Management System that dynamically allocates capacity between e-commerce orders and store replenishment in real time.
The results at earlier automated sites provide the clearest evidence that the strategy works. Automation more than doubled productivity at Macy’s first two facilities. China Grove is designed to handle a substantial share of Macy’s digital volume across all product categories.
Once fully operational, the facility is expected to handle nearly 30% of Macy’s total digital supply chain capacity, shipping orders across all product categories including apparel, beauty, home, and toys, from a single location.
COO Tom Edwards highlighted the operational impact saying, "We’re in stock more in stores. We’re utilizing different capabilities like hold and flow to make sure we’re better utilizing inventory and satisfying customer needs."
IT Modernisation and Gen AI
Running parallel to the fulfillment investment is a cloud migration overseen by CIO Keith Credendino. Macy’s has simplified its IT operations and shifted more workloads to the cloud, reducing operating costs while gaining access to the scalable compute that modern AI requires.
Edwards noted this enables Macy’s to “operate at a lower cost and have access to more capabilities.” Without this infrastructure layer, the AI pilots the company is now running would not be possible at enterprise scale.
On the generative AI front, Macy’s is running active pilots in demand planning, forecasting, inventory replenishment, and customer personalization.
The company uses SAS Customer Intelligence 360 for marketing decisioning, shifting from mass email campaigns to triggered, contextually relevant communications tied to its Star Rewards loyalty programme which uses customer behavioral data to determine what message reaches which customer and when.
Leadership has been notably candid about where this work stands. Edwards described the company as being in the “very, very early innings” of generative AI, focused on “testing and learning” rather than scaled production deployment. A CIO Dive survey found more than three in five retail leaders worry about AI-generated output quality.
China Grove's proven robotics double productivity while Walmart deploys agentic AI across billion-dollar supply chains. Edwards' "very early innings" admission is the main tell that genAI pilots won't close the personalization gap with Amazon's decade-ahead recommendation engine anytime soon.
The $640M facility handles 30% digital capacity competently, but department stores face structural extinction against e-comm natives. Q2/Q3 comp sales beats prove Bold New Chapter removes drag effectively, yet little to none leadership attribution to AI reveals one thing.
Macy's is executing a cost-driven turnaround that happens to use AI, rather than an AI-driven transformation that happens to cut costs
Smart sequencing buys Macy's a few years as a niche survivor serving aspirational middle-market loyalty which is insufficient to reclaim market share. The real question Macy will face going forward will be if automation alone can resurrect a dying format.