Target Corporation to spend $1 billion in CapEx to open new stores and remodel older ones

Target Corporation is allocating more than $1 billion in CapEx this year to remodel 130-plus stores and open 30 new locations.

The remodels include stores in Arizona, California, Florida, Illinois, Michigan, Nevada, North Carolina, Ohio, Oklahoma, Texas and Virginia.

Key components of the capital investment include:

- Remodel older stores to improve shopping experience; (especially in beauty, home, apparel and grocery).

- Expand fulfillment capacity for drive up, order pickup and same-day delivery; (important because Target fulfills most online orders from stores rather than warehouses).

- Open stores in faster-growing metro markets where Target believes it is under penetrated.

- Reposition the brand around “style + value” after losing some momentum with consumers.

Target is trying to reverse several years of sluggish traffic and market-share pressure from Walmart, Amazon, other discount chains and fast-growing online competitors.

Deploying significant CapEx to enable physical retail to thrive at Target while expanding the store’s ability to fulfill preorders is a particular smart move at this time.

Many stores are aging. Some locations have not seen major upgrades in over a decade. Target employees on Reddit, Inc. frequently describe outdated layouts, inefficient backrooms and aging equipment.

Target wants to evolve its stores in ways that reflect how the customer is shopping today, which means creating more intuitive layouts and expanded merchandise assortments, but the company is also is looking to strengthen the role the stores play in fulfillment of online orders, according to Laurie Mahowald, senior vice president, Target Properties.

Management told Fortune last November that shoppers now expect stores to feel more curated, convenient and experiential, particularly for younger consumers who still enjoy browsing in-person for beauty, apparel and home décor.

Another factor is growth opportunity. Target has fewer U.S. stores than several key competitors and says it plans to add roughly 300 stores by 2035.

Read more: Target’s ambitious store remodel plans include 130 locations (Drug Store News)