The week before Thanksgiving delivered a flood of retail earnings reports and strategic announcements that paint a revealing picture of where the industry stands heading into the critical holiday quarter. From technology experiments to operational pivots to marketing wins, this week’s Fast Five podcast, sponsored by the A&M Consumer and Retail Group, Mirakl, Ocampo Capital, Infios, and Quorso, dives into the latest moves from major retailers and offers important lessons about what’s working in today’s competitive landscape.
The Earnings Picture: A Tale of Diverging Fortunes
Last week’s earnings season crystallized a trend that’s been building throughout 2025: the retail industry is experiencing a significant divergence in performance, with clear winners pulling ahead while others struggle to find their footing.
The numbers tell a compelling story. Walmart, TJX, Ross Stores, and Best Buy all raised their financial outlooks for the back half of the year, demonstrating strong momentum heading into the holidays. Meanwhile, both Home Depot and Target cut their earnings forecasts, signaling challenges that extend beyond typical seasonal variations.
Target’s performance stands out as particularly concerning. The retailer’s third-quarter results showed sales performance so weak that the four-year comparable sales stack has now turned negative. That means Target hasn’t grown at all over the last four years, a remarkable statistic for a retailer of its size and market position.
What makes this even more telling is the context. Walmart performed well with essential purchases. The discount chains thrived. Best Buy, which sells largely discretionary products, posted solid results. Even apparel retailers like Abercrombie, Kohl’s, and Gap showed strong growth. The question becomes unavoidable: where exactly are Target’s customers going, and why?
The data suggests Target is losing ground across multiple categories. Walmart appears to be capturing essential purchase occasions. TJX, Abercrombie, and Gap are winning in apparel. HomeGoods and TJX are taking home category share. Target finds itself in the challenging position of being squeezed from multiple directions simultaneously, all while navigating a CEO transition, corporate layoffs, and the pressure of the holiday season.
Target’s ChatGPT Integration: Innovation or Desperation?
Against this backdrop, Target announced it would enable mobile shopping through ChatGPT, launching in beta the week of November 24. The timing of this announcement, just two days before Thanksgiving and on the same day as disappointing earnings, raises important questions about strategy and execution.
The integration allows users to ask for help, search, and purchase products using conversational language directly within ChatGPT. Customers can complete full shopping experiences, including purchasing multiple items in a single transaction, shopping fresh food, and selecting drive-up, pickup, or shipping options.
There’s no question that LLM-enabled commerce represents an important evolution in how consumers will discover and purchase products. Every major retailer should be exploring this space and developing strategies for natural language search and AI-powered shopping assistants.
However, the execution details matter enormously. The timing of Target’s launch, right before one of the busiest shopping weeks of the year, announced on a day when the company needed to explain poor results, creates the appearance of a rushed response rather than a thoughtful strategy. The user experience also raises questions, as it essentially places the Target app inside another app rather than reimagining the shopping journey for an AI-native environment.
Compare this to Walmart’s more measured approach: starting with natural language search on their own properties first, then selectively integrating with AI platforms in specific categories where it makes strategic sense. This sequencing demonstrates a clearer understanding of how to build toward AI-enabled commerce in a way that strengthens the retailer’s own capabilities first.
Kroger’s $2.6 Billion Automation Pivot
While Target experiments with AI shopping, Kroger made headlines with a different kind of strategic shift: closing three of its automated Customer Fulfillment Centers (CFCs) as part of a plan to improve e-commerce profitability by $400 million in 2026.
The grocer will incur impairment and related charges of $2.6 billion in the third quarter as it shuts down facilities in Wisconsin, Maryland, and Florida. The decision follows a comprehensive site-by-site analysis of its automated fulfillment network, with Kroger now leaning into in-store fulfillment and expanding third-party e-commerce partnerships.
The move makes strategic sense when you look at the locations being closed. These facilities were in markets where Kroger either has limited presence or where demand didn’t materialize at the scale needed to justify the infrastructure investment. Kroger’s conducted site-by-site analysis underscores an important reality about retail automation: the technology works, but only when the volume and market conditions support it.
What’s particularly interesting is Kroger’s pivot toward smaller-scale automation within stores rather than abandoning automation altogether. This approach, which industry experts have been predicting, allows retailers to maintain automation benefits while keeping fulfillment closer to customers and existing infrastructure.
The shift may also reflect broader changes in grocery shopping patterns. With increasing focus on fresh, high-protein, nutrient-rich products—partly driven by the growing adoption of GLP-1 medications—stores may be better equipped to handle fulfillment that requires more chilled and fresh product handling than large centralized facilities designed primarily for center-store items.
Gap’s Marketing-Driven Turnaround Gains Momentum
In a striking contrast to Target’s struggles, Gap reported its strongest comparable sales growth since fiscal 2017, with overall comps rising 5% in the third quarter. The Gap brand itself surged 7%, Old Navy grew 6%, and Banana Republic posted 4% growth.
The catalyst? A viral “Better in Denim” campaign featuring girl group Katseye that successfully captured attention across Gen Z, millennials, and even nostalgic Gen X consumers. Under CEO Richard Dickson, the former entertainment executive who helped revitalize Barbie at Mattel, Gap is demonstrating how compelling creative marketing combined with improved product can reignite interest in a legacy brand.
The results show positive momentum building: Q1 posted a +5% two-year stack, Q2 delivered +4%, and Q3 achieved +6%. This consistency matters more than any single quarter’s performance, as Dickson himself noted, describing the turnaround as “a story about consistency” requiring the right mix of product, marketing, and partnerships.
However, important questions remain. Marketing can drive trial, but sustaining growth requires getting the product right year after year. The real test will come in Q1 2026, which appears to be the most challenging comp quarter. Can Gap maintain momentum when the marketing buzz fades and the brand needs to prove it can consistently deliver products customers want to buy repeatedly?
Bath & Body Works Tackles Gray Market Sales Through Amazon
In a move that reflects evolving thinking about marketplace strategy, Bath & Body Works announced plans to launch a curated assortment on Amazon in early 2026. The decision addresses a specific problem: CEO Daniel Heaf estimates between $60 and $80 million in gray market sales already happening on Amazon, which he described as both “brand dilutive and product dilutive.”
Rather than continuing to cede this business to unauthorized sellers, Bath & Body Works will start with a small assortment of evergreen products to “test and learn” while building ratings and reviews. The approach demonstrates a pragmatic recognition that customers are already buying these products on Amazon. However, the question to consider is whether the brand should control that experience or allow it to happen in an uncontrolled way.
Key Takeaways for Retail Leaders
This week’s announcements reveal several important patterns. First, consistent execution matters more than flashy technology announcements. Gap’s turnaround is built on steady improvement across product, marketing, and partnerships, not on rushing to adopt every new technology platform.
Second, automation and AI strategies must be grounded in real customer demand and market conditions. Kroger’s pivot demonstrates that even good technology fails without the right supporting context, while Target’s ChatGPT integration shows how poor timing and execution can undermine potentially valuable innovations.
Third, the rise of AI-powered search and shopping requires thoughtful strategy about how and where to build presence. There’s no single right answer, Bath & Body Works’ Amazon approach differs from Target’s ChatGPT integration, but the decisions should flow from clear customer insights and market realities rather than the desire to appear innovative.
As the industry heads into the critical holiday season, these moves will be tested in the market. The retailers that have built consistent strategies grounded in customer needs and operational realities are positioned to succeed. Those still searching for quick fixes or technology solutions to deeper strategic challenges face a more uncertain path forward.
Listen now on your favorite podcast platform or watch the full episode on YouTube at youtube.com/omnitalkretail. And don’t forget to subscribe to the Retail Daily Minute for your daily dose of curated retail headlines every morning!
Apple Podcasts | Spotify | SoundCloud | Amazon Music
Be careful out there,
– Chris, Anne, Producer Ella and the Omni Talk team
P.S. Be sure to check out all our other podcasts from the past week here, too: https://omnitalk.blog/category/podcast/
P.P.S. Also be sure to check out our podcast rankings on Feedspot
Music by hooksounds.com
#retailearnings #target #chatgpt #kroger #gap #bathandbodyworks #omnitalk #retailtech #retailinnovation #ecommerce #retailpodcast
Omni Talk® is the retail blog for retailers, written by retailers. Chris Walton founded Omni Talk® in 2017 and have quickly turned it into one of the fastest growing blogs in retail.