Retailers Lean on AI to Optimize Inventory

Retailers are navigating a consumer landscape where every misstep in stocking the right product can mean lost sales or excess costs.

Shoppers, more selective in their spending, expect their preferred items to be available when they want them.

Meanwhile, supply chains remain vulnerable to disruption.

Against this backdrop, inventory management has become a lever for profitability, and some retailers are turning to artificial intelligence to balance efficiency with customer satisfaction. Their latest earnings results show that smarter, AI-driven inventory systems are helping to keep shelves stocked.

Macy’s

Macy’s second-quarter 2025 earnings report Wednesday (Sept. 3) showed signs of turnaround, as comparable-store sales rose 0.8%, beating expectations.

Management attributed the gains in part to its “Reimagine” store modernization program, which includes more strategic merchandise selection and improved store organization, suggesting that smarter stocking, which is a tech-driven approach that incorporates AI, along with other features such as RFID, has given rise to efficient inventory curation and modernization.

Kohl’s

In its second-quarter 2025 earnings report Aug. 27, Kohl’s said it is continuing its shift toward eCommerce partnerships and operational improvements.

“We’re also focused on restoring trip assurance for our customers by refining our buying strategies to ensure deeper inventory and improved in-stock levels in our basics and key essentials businesses,” Interim CEO Michael Bender said during the earnings call with analysts.

Inventory was down 5% in the quarter.

Target

Target’s second-quarter 2025 efforts to right-size inventory continued after elevated stock levels involved actions to slash shrink and improve inventory reliability via better forecasting, according to the company’s Aug. 20 earnings report.

The company has said AI-powered core inventory systems now cover about 40% of its assortment.

“We’ve started redesigning large cross-functional processes, like how our teams build our merchandising and inventory plans to clarify roles and access the right data to make more effective decisions,” incoming CEO Michael Fiddelke said during the earnings call. “…[B]y leveraging AI and other tools, our team can build and update forecasts more accurately while spending less time creating them. So, we’re investing to deploy the power of AI more fully across our team, freeing them up to spend more time bringing joy to our guests.”

While discussing second-quarter 2024 earnings, Fiddelke said: “As part of our work to improve our end-to-end replenishment execution, we’re also midstream on a multiyear journey to modernize with tools powered by AI, our core inventory management systems. These are the tools that enable more accurate forecasting, help us better position inventory to drive in-stock speed and reduce costs. These new systems are now used by about 40% of the assortment. That’s more than double the percentage that used them in 2023, progress we expect to continue in 2025 and beyond.”

Walmart

In his remarks during a second-quarter 2026 earnings call Aug. 21, Walmart Chief Financial Officer John Rainey emphasized the company’s investments in “supply chain automation… and in AI,” as the firm has kept operating income forecasts intact.

Separately, Walmart U.S. CEO John Furner told analysts during the call: “I’ve been in stores all over the country the last few months, and I’m really pleased with the inventory levels on the floor in the supply chain. The back rooms are in great shape. So, I felt really good about the way we exited the quarter. We exited with 2% inventory growth.”

Dick’s Sporting Goods

Dick’s Sporting Goods reported second-quarter 2025 earnings Aug. 28 that showed a 5% comparable sales gain and raised full-year guidance.

The company is emphasizing AI-driven inventory management and RFID automation.

“We’re investing in tools for our teammates so that they use RFID to help find products around the store and to be able to send products faster to athletes,” CEO Lauren Hobart told analysts on the earnings call. “And we have AI embedded in many of these tools. We’ve got search function, supercharge search on ecom that is based on AI enablement and as is teammate scheduling, and product and merch assortment planning.”

Amazon

No discussion of retail would be complete without mention of Amazon. The commerce juggernaut’s second-quarter 2025 earnings report, released July 31, described multiple AI investments driving inventory and fulfillment gains.

In June, Amazon said it enhanced inventory management with AI-powered demand forecasting, improving regional accuracy by 20% and optimizing inventory placement and delivery speeds for millions of popular items.

DeepFleet is an AI model that coordinates Amazon’s warehouse robots to reduce bottlenecks and improve robot travel efficiency. It’s an automation advance Amazon ties to faster picking and better availability at fulfillment centers.

“Strategic inventory placement drives multiple benefits, including better in-stock availability, shorter delivery routes, and faster customer delivery times,” CFO Brian Olsavsky said during the earnings call. “When we optimize inventory location, we can consolidate more items per package, reducing packaging materials and costs.”

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