Artificial intelligence is redefining enterprise retail, turning once-static operations into dynamic, AI-powered ecosystems. From optimizing supply chains to enhancing in-store experiences, AI is fundamentally altering how businesses interact with customers and manage backend processes. At the core of this transformation is intelligent automation, allowing retailers to predict, adapt, and respond to market shifts in real time.
One of the leading voices in this evolution is Naga Tirumala Rao Chillapalli, Technical Engineering Manager at Macy’s, who has played a pivotal role in modernizing retail infrastructure through AI-driven solutions. With expertise in enterprise application integration, middleware infrastructure, and cloud-native architectures, Naga has been instrumental in Macy’s PoS transformation, ensuring its scalability and adaptability in an increasingly AI-driven market.
Beyond his work at Macy’s, Naga is a published author on Hackernoon and has contributed research to leading industry publications such as SARC, where he authored a paper. His insights provide a deep understanding of AI, cloud computing, and enterprise automation in retail. Additionally, his contributions to IT transformation were recognized at the ICMR conference, where he received an award for his book, Enterprise Ready IT Transformation.
We sat down with Naga to discuss how AI is shaping enterprise retail, the challenges of modernizing legacy systems, and the road ahead for AI-powered business operations.
Naga, thanks for joining us today. You lead Macy’s team responsible for transforming critical business applications. How do you see AI evolving retail technology in the coming years?
Thanks for having me. AI is no longer just a supporting tool for retail—it’s becoming the foundation of enterprise operations. In the past, retail businesses relied on static, rule-based systems to manage everything from inventory tracking to fraud detection. But today, AI-driven architectures optimize these processes in real-time, ensuring systems can anticipate, adapt, and react with precision.
At Macy’s, the modernization of our Point-of-Sale or PoS systems was not just about upgrading outdated technology. It was about creating an intelligent infrastructure that could scale dynamically while improving customer experience, transaction efficiency, and fraud prevention. AI has allowed us to integrate predictive analytics for demand forecasting, machine learning models for checkout optimization, and cloud-native solutions that ensure resiliency and speed even during peak shopping seasons.
Retail is becoming more than just a transactional experience—it’s about delivering hyper-personalized, seamless, and intelligent shopping journeys. AI ensures that we’re not just keeping up with customer expectations, but staying ahead of them.
Business Connect played a key role in transforming Macy’s vendor integration and supply chain efficiency. What was your approach to modernizing this system?
Business Connect was a game-changer for Macy’s, enabling seamless electronic data interchange or EDI between Macy’s and over 10,000 global business partners. Before this initiative, vendor compliance and order processing relied on fragmented, legacy systems, leading to inefficiencies in merchandising, transportation, and digital order tracking.
I led the architecture and development of a highly scalable EDI processing platform using TIBCO Business Connect, allowing Macy’s to process inbound and outbound transactions more efficiently and in real time. This significantly improved shipment processing, vendor compliance tracking, and transportation routing—reducing transportation costs by $10 million and cutting errors in inventory management by 10%.
A key milestone was integrating Macy’s system with Zola and Toys R Us, ensuring their platforms could seamlessly exchange order data and fulfillment tracking, especially during peak holiday seasons. The success of this initiative earned me Macy’s Make Magic Award, a recognition of the project’s impact on operational excellence and vendor collaboration.
With Business Connect, Macy’s now has an AI-powered, data-driven supply chain, allowing vendors to synchronize shipments, track orders in real time, and ensure customers receive faster, more accurate deliveries. This modernization has positioned Macy’s as a leader in intelligent retail logistics, proving that a well-optimized supply chain is a direct driver of customer satisfaction and business growth.
What role will AI play in shaping retail experiences over the next five years?
I’m excited and optimistic about the fact that AI is set to completely redefine the retail landscape in ways we’re only beginning to understand. Over the next five years, AI will drive hyper-personalized shopping experiences, making it possible for retailers to offer individualized promotions, product recommendations, and real-time pricing adjustments tailored to each customer.
Another significant shift will be the expansion of AI-powered conversational agents and virtual assistants, which will enhance customer interactions both online and in stores. We’re already seeing AI-driven chatbots providing real-time support, but the future lies in fully conversational AI that can guide customers through purchases, answer complex queries, and even offer personalized shopping assistance in real time.
AI will also revolutionize inventory management. Machine learning models will analyze purchasing behaviors and market trends to predict demand fluctuations with higher accuracy than ever before. This will allow retailers to optimize stock levels dynamically, reducing both overstocking and stockouts, which are two of the biggest pain points in retail operations.
One of the most exciting developments will be Edge AI, which will allow AI models to run closer to customer transactions, making real-time fraud detection, personalized recommendations, and checkout optimizations even faster. The goal is to make shopping experiences as seamless and intuitive as possible, both in physical stores and digital marketplaces.
How is AI transforming fraud detection in retail, and how have you applied it at Macy’s?
Fraud detection has traditionally been a reactive process, with retailers identifying fraudulent transactions only after they occur. However, AI is shifting fraud prevention from reactive detection to proactive mitigation by analyzing vast amounts of transaction data in real-time. Machine learning models can now detect anomalies, flag suspicious patterns, and even predict fraudulent behavior before it happens.
At Macy’s, we implemented AI-powered fraud detection across multiple touchpoints, including PoS transactions, online orders, and returns processing. By leveraging AI-driven risk models, we can differentiate between legitimate and fraudulent transactions without adding unnecessary friction for customers. One of the most impactful applications has been in real-time fraud scoring, where AI models analyze transaction velocity, device behavior, and geolocation data to identify potential risks instantly.
For example, AI-driven fraud detection helped reduce chargeback fraud by identifying patterns of repeated high-value returns, enabling us to flag suspicious refund requests before they were processed. Similarly, in our digital commerce operations, AI algorithms assess unusual spending spikes, ensuring fraudulent activities don’t slip through.
What’s next for AI in enterprise retail, and how do you think businesses can stay ahead?
I think AI is no longer an optional enhancement—it is the strategic foundation of retail transformation. Businesses that fail to fully integrate AI into their operations will struggle to compete. The future belongs to companies that not only adopt AI but embed it deeply into their decision-making frameworks.
At Macy’s, we are expanding AI’s role beyond just operational efficiency. We are now focusing on enhanced observability, AI-driven automation, and real-time customer engagement to ensure that we stay ahead of the curve. AI is reshaping every part of the retail value chain, from supply chain logistics to real-time fraud detection, and businesses must be ready to embrace this shift.
The key to staying ahead lies in scalability and adaptability. AI-driven systems must be designed to continuously learn, evolve, and improve, ensuring that businesses remain resilient even as consumer behaviors and market conditions change.
The journey has only just begun, but one thing is clear: AI is the future of retail. Those who invest in scalable, intelligent, and customer-driven AI solutions will lead the next wave of retail innovation.
With leaders like Naga Tirumala Rao Chillapalli driving AI-powered innovations at Macy’s, retailers are equipped with scalable, intelligent, and resilient systems that anticipate customer needs, optimize inventory, and enhance shopping experiences in real time.