{"id":8549,"date":"2025-11-27T15:29:17","date_gmt":"2025-11-27T20:29:17","guid":{"rendered":"https:\/\/distributionstrategy.com\/?p=8549"},"modified":"2026-09-11T10:45:55","modified_gmt":"2026-09-11T14:45:55","slug":"lowes-leans-on-ai-to-cut-inventory-and-lift-margins-as-sku-reductions-advance","status":"publish","type":"post","link":"https:\/\/distributionstrategy.com\/2025\/11\/lowes-leans-on-ai-to-cut-inventory-and-lift-margins-as-sku-reductions-advance\/","title":{"rendered":"Lowe\u2019s Leans on AI to Cut Inventory and Lift Margins as SKU Reductions Advance"},"content":{"rendered":"<p>Lowe\u2019s is using artificial intelligence to simplify its assortment and reduce inventory levels, a strategy that continues to have measurable impact on its latest quarterly results.<\/p>\n<p>Lowe\u2019s reported $17.2 billion in inventory at the end of the third quarter, down roughly $400 million from the prior year. Chief financial officer Brandon Sink told analysts the decrease came \u201ceven after absorbing nearly $600 million in inventory related to acquisitions and increased tariffs.\u201d He said improvements were tied to \u201congoing inventory productivity initiatives.\u201d<\/p>\n<p>Lowe\u2019s is in the middle of a multiyear effort to reduce its product assortment by about 15% by the end of 2025, focusing on underperforming and duplicative SKUs. Executive vice president of merchandising Bill Boltz described the effort on the call as a \u201cdisciplined process\u201d tied to category resets and productivity improvements.<\/p>\n<p>The SKU reductions are supported by a technology overhaul that began last year. Lowe\u2019s announced in 2024 that it would deploy AI-driven forecasting and replenishment technology from RELEX Solutions, implemented in partnership with Accenture, to improve seasonal planning and inventory visibility across stores and distribution centers.<\/p>\n<p>These systems provide the data backbone for determining which SKUs stay, which go, and how quickly items should be replenished.<\/p>\n<p>Lowe\u2019s has also rolled out AI tools that give employees and customers improved access to product and inventory information:<\/p>\n<ul>\n<li>Mylow virtual adviser, introduced in March 2025, uses generative AI to answer project questions and recommend products on Lowes.com and the Lowe\u2019s app, according to Digital Commerce 360.<\/li>\n<li>Mylow Companion, deployed chainwide on May 5, 2025, provides store associates with real-time access to product details, stock information, and project guidance. Lowe\u2019s said it is the first large-scale AI assistant deployed across a home-improvement retail workforce.<\/li>\n<\/ul>\n<p>Lowe\u2019s has also built AI-powered digital twins of all stores, updated several times per day, and used to test layout changes and evaluate product placement.. The simulations allow teams to model SKU removals and category resets before executing changes in physical locations.<\/p>\n<p>To support these applications, Lowe\u2019s is leveraging Dell Technologies and Nvidia to run AI workloads closer to stores. According to Dell\u2019s disclosures and industry reporting, the systems support tasks such as forecasting, computer vision, store simulation, and project guidance.<\/p>\n<p>Taken together, the company\u2019s earnings disclosures and public statements show:<\/p>\n<ul>\n<li>Inventory is down year over year, even with added acquisition-related stock and tariff impacts.<\/li>\n<li>Gross margin improved, with executives directly attributing the gain to SKU exits and better inventory productivity.<\/li>\n<li>AI tools are embedded across forecasting, planning and store operations, rather than limited to pilot deployments.<\/li>\n<\/ul>\n<p>Lowe\u2019s said it will continue to cut SKUs through 2025 while expanding its use of AI tools across more categories and store processes. The retailer told analysts it expects inventory discipline and SKU productivity to remain central to its operating plan as it enters 2026.<\/p>\n<p><a href=\"https:\/\/archive.distributionstrategy.com\/subscribe\/\">Don\u2019t miss any content from Distribution Strategy Group. Join our list.<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Lowe\u2019s announced in 2024 that it would deploy AI-driven forecasting and replenishment 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