One giant integration announcement. A technology both revolutionary and catastrophically overhyped. An entire industry rushing toward a cliff like lemmings. Are we watching retailers accidentally create the monster that will devour them all? Chris Walton's 2025 superlatives definitely don’t disappoint.

Hello Omni Talk Fans and happy holidays! As we close out 2025, I want to take a moment to reflect on what was, without question, one of the most watershed years in retail history. Overall, looking back, I would say that I'm walking away with some pretty strong convictions about where this industry is headed.

So grab your coffee, or if you're like me at this time of year, maybe something a bit stronger (Irish, perhaps?), and let's talk about what 2025 really meant for retail, and more importantly, what it tells us about 2026 and beyond by handing out this year’s Superlative Awards.

Retailer of the Year: Costco 

Let me start with our Retailer of the Year: Costco. Now, I'll be the first to admit I've been pretty tough on Costco in years past. And, by tough, I mean rather scathing. But here's the thing. I always try to call it like I see it and give praise when praise is due. 

2025 was the year Costco showed the entire industry what strategic conviction actually looks like.

When the DEI backlash hit the business world like a freight train this year, most retailers folded faster than a cheap lawn chair. Target retreated. Others went silent. But Costco? Costco held its ground. And you know what happened? They started gaining high-income shoppers from Target, the very demographic everyone's fighting over.

But it wasn't just about DEI. Costco also made smart operational moves. Expanding its operating hours for its executive members and wading heavily into Black Friday are two examples that particularly come to mind. They demonstrated something I've been preaching for years, i.e. that intentionality beats reactivity every single time.

Now, I know what some of you are likely thinking, and rightly so. What about the stock price?

On the one hand, it is my one misgiving, too. Being down 11% this year is definitely not good. But on the other hand, the market’s expectations of performance were a little overblown too, and hence why the long-term view matters. Over the past two years, that stock is up 46%. All of which is why I am proud to give Costco this year’s award. Costco has never just managed to the quarter. It has never been one to chase every shiny object that comes along. Costco always plays the long game, and Costco is great at it. 

There are more than a few retailers that wish they had the quarter Costco just had.

Headline of the Year: The ChatGPT Integration That Opened Pandora's Box

For Headline of the Year, I am going with Walmart's ChatGPT integration. And I will just come right out and say it. I don’t think any of us have the slightest idea what this headline means yet. Walmart is simultaneously fortifying generative AI search on its own site via Sparky, while also partnering with OpenAI. 

So what's the play here?

Here's why this matters, and why I'm calling it Pandora's Box. First, as I wrote about in a previous Wrambling, this move potentially hurts Amazon. Walmart has always been the third banana to Google and Amazon for product search. This partnership gives Walmart the option value of deciding whether it wants first product searches to happen via Sparky (its onsite answer engine) or via the large language model platforms. 

Second, Walmart is being smart about going slow. They're not integrating groceries with ChatGPT yet. They're learning, testing, figuring out what works.

But here's the third point, and this is what keeps me up at night: the fact that Walmart announced this partnership means everyone else will and already is now rushing in willy-nilly to do something with these platforms, without really articulating their long-term strategies. I'm watching retailers experiment with putting their app properties directly in AI interfaces (cough, Target), and it feels like we're all digging around in the dark without a flashlight.

The box is open, folks. There's no closing it now. The question is whether retailers are going to be intentional and stay true to their business models about how they approach this, a la like we just discussed with Costco, or whether they will ultimately react their way into accidental irrelevance.

Retail CEO of the Year: Doug McMillon, Walmart's Greatest Leader Not Named Sam Walton

When it comes to Retail CEO of the Year, this wasn't even close. Doug McMillon wins hands down. Not just for this year, but for the past decade.

The numbers tell the story: Under Doug's leadership, Walmart's share price is up over 300% and revenue also increased from $486 billion to $681 billion. 

Enough said?

Not quite because here's the part I love most, and here's where Doug's genius really shows. He took Walmart upmarket without sacrificing the brand. 

Let that sink in for a moment. 

He made Walmart aspirational to higher-income shoppers while keeping everyday low prices as the core value proposition. That's a Houdini-like feat. Doug had the vision early on to see e-commerce, omnichannel, and marketplaces as existential imperatives, and he moved heaven and earth to get Walmart there.

For my money, Doug McMillon will go down as the second-greatest CEO in the history of Walmart. When the greatest is the founder, that's really saying something.

Retail Technology of the Year AND Most Overhyped Technology: The Agentic AI Paradox

Can a technology be the technology of the year and also overhyped? In the case of agentic AI, that answer is definitely, “yes.”

Let me explain.

Agentic AI is important, critically important. It is probably the most important innovation to hit retail in the last thirty years. But we also have to be smart about where to harness it. 

For my money, the real value will come from using it to improve operations, e.g. using AI to run warehouses more efficiently, to inform store operations, to make inventory replenishment more productive, that's where the real value is. That's where I would be experimenting first if I were still a high level retail executive.

But by god, the consumer-facing hype around agentic AI this year has been completely out of control. Watching everyone and their brother launch experiments right before the holidays to plug their commerce experiences directly into AI interfaces was the signal to me that many retailers are running around like chickens with their heads cut off. Everyone just needs to slow down, take a breath, and actually think through the strategic implications.

Because, if we are not careful, we could unknowingly give birth to what I would call the first ever search engine/marketplace of marketplaces monolith. One of the agentic AI platforms will become Amazon AND Google 1994 in 2034. They're going to get a cut of revenue from retailers who allow them to plug in easily. It won't be everyone, but it'll be enough to change the game forever. And I, for one, haven’t witnessed the birth of something that scary since John Hurt ate noodles in Alien.

So if I were sitting in a boardroom right now, I wouldn’t be asking what AI are we implementing, like checking off the box of a scorecard. I would be asking much harder questions, questions like: What am I okay with getting scraped, and what am I not? Do I want AI agents checking out on my site without that customer ever actually visiting my property? What's it going to cost me to prevent certain information from being transmitted that way? And, most importantly, what is it going to take to get generative AI search live and functioning on my site first before I even think about plugging into the agentic platforms?

These are the conversations that need to happen, and my fear is that many retailers are not having them to the degree that they should and instead are running to the agentic AI platforms like lemmings off a cliff.

Best New Partnership of the Year: The Deal That Will Define Tomorrow's Grocery

My Best New Partnership of the Year award goes to Walmart and Avery Dennison for their work on inventory tracking in perishables, aka the holy grail of grocery retailing.

Being able to track and understand spoilage in real-time is an enormous benefit. If this partnership delivers even half of what has been promised, the ramifications to Walmart's profit line could be staggeriing. We're talking about turning waste into margin, about knowing exactly when products are approaching their sell-by dates, and about pricing better timed to supply. 

Oooh, and more thing: Once Walmart proves this model works, every other grocer is going to need to follow suit or get left behind. It won’t be optional. It will be table stakes

Best Strategic Move from a Struggling Retailer: The Macy's Surprise

I'm going to admit something that might surprise some people. I'm starting to like Tony Spring's approach at Macy's.

Ok, by now, hopefully you have picked yourself off the floor, but, specifically, I like how he's focusing on the store experience. Increasing the amount of money being deployed in the shoe area is just smart thinking. 

What are your advantages? Invest in them. Don't try to be something you're not.

Macy's isn't going to out-tech Amazon. They're not going to out-discount Walmart. But they can create an in-store experience that makes shopping for fashion and home goods feel special again, or at least on the margins, more special than it has been for the past decade. And in a world where everyone's chasing the next big technology play, there's something refreshingly strategic about saying, "We're going to be really, really good at what we used to be known for" (my quotes).

It's early days, and Macy's has a long road ahead. This focus on fundamentals, on understanding your strengths and doubling down on them, is exactly the kind of strategic clarity that builds sustainable businesses, and like Costco above, I have to give credit where credit is due. 

Without a doubt, Macy's recent Q3 financial performance (exhibiting its strongest growth in three years) is a strong turn in the right direction.

Most Laughable Headline of the Year: Target’s Small Store Strategy

Cue John Cougar Mellencamp but the headline from the past year that still, to this day, makes me chuckle out loud, is Target’s plans to build more stores in smaller towns throughout America. 

I don’t find this headline funny in a good way either. This one actually hurts because I ran stores in places like Casper, Wyoming and Scottsbluff, Nebraska. I know this business. The volume just isn't there in small towns. And if it is, Walmart already has that business locked up. Target announcing a small-town strategy feels like a PR reach, a way to spin what's really happening, which is that it’s struggling to find growth in both its traditional suburban markets and via urban centers.

This is what reactive strategy looks like. Instead of asking "Where do we actually have a right to win?" they're asking "Where haven't we tried yet?" Those are fundamentally different questions, and they lead to fundamentally different outcomes.

Tomorrow's Headlines Today: The Return Of The Ghost Cafe

For my 2026 prediction, I predict that Starbucks will eventually do an about face on its position that every physical coffee house needs to have a seating area and unveil a new mobile order and ghost café concept. 

Starbucks is facing the same problem restaurants faced five years ago. A huge portion of their business is now mobile order and delivery. The four-wall economics of prime real estate don't make sense when an overwhelming amount of your orders are for digital pickup and delivery.

So what do you do? 

It’s operations 101. You either: a) redesign your coffee houses (which takes considerable time and investment) or b) create smaller, mobile-order-only and delivery pickup locations in nearby locations to improve throughput, so that your cafe customers aren’t competing for drinks with people who just want to get in and out of Starbucks as fast as possible. 

Final Thoughts: The Year That Changed Everything

In closing, what struck me most about 2025 was it was the year we all realized, I mean, really, truly realized, that nobody has all the answers anymore. Not Walmart. Not Amazon. Not the consultants. Not the tech vendors. And certainly not me.

AI went from being a future threat to a present reality in about six months. The competitive dynamics of e-commerce that we all spent decades learning have been completely upended. The customer behaviors we thought were stabilizing coming out of the pandemic are now anything but.

But that is all actually okay. We got this!

The retailers who thrived this year weren't the ones with perfect strategies. They were the ones willing to admit uncertainty, to experiment, to learn in public, to adjust when things didn't work. Doug McMillon, for instance, likely didn't have Walmart figured out from day one. He figured it out by being willing to make big bets and adjust when needed. Costco didn't have a playbook for navigating the DEI wars. Costco just stayed true to who it was and let the results speak for themselves.

Ultimately, the awards handed out this year tell a story about an industry in the middle of a massive transformation. We're watching AI fundamentally reshape how products get discovered and purchased. We're seeing the lines between physical and digital blur to the point where the distinction barely matters anymore. We're witnessing the rise of new business models that didn't exist six months ago, let alone five years ago.

And if 2025 taught us anything, it's that this transformation is accelerating, not slowing down.

When I was at Target, I, like so many of you, was wrapped up in annual strategic planning. You made your plans one, two, even three years out and then executed against them. That world is gone. Today, retail is a three-month business because the pace of change is absolutely relentless.

However, make no mistake, the fundamentals still matter. Understanding your customer. Delivering value. Creating experiences worth having. Taking care of your people. Placing the right bets. These things haven't changed, even if the methods for achieving them have or soon will.

2025 was one hell of a year, and 2026, like every new year in retail, only promises to be ever more interesting than the one that came before it.

Be careful out there,

- Chris and the entire Omni Talk team

Editors: Chris Walton & Anne Mezzenga

Chris Walton and Anne Mezzenga are leading experts and influencers in omnichannel retailing. Connect with Chris and Anne on LinkedIn.

About Omni Talk and DistilINFO

Together Omni Talk and DistilINFO publish industry news, views and interviews about the future of retail. We distill the information for you - saving time and keeping you up to date on the topics in the industry that matter most.

Advertise With Us

Visit Our Website

Subscribe to Our Newsletter

You are receiving this newsletter because you are subscribed to Omni Talk and/or DistilINFO Publications. If you feel this email was sent by mistake or you want to opt out, you can unsubscribe.

By receiving our eNewsletters you agree to OmniTalk's Terms of Use and Privacy Policy.