In a win for employment and shoppers in the Upper Mountains, the Target store in Katoomba will be converted to a Kmart.
But the Winmalee store will close down.
Target's owner, Wesfarmers, announced last week plans to either convert or close up to 167 Target stores to reduce its "unsustainable cost base".
Katoomba Target is one of 53 stores slated for conversion. It will be transformed some time next year.
Winmalee will close down in early to mid 2021.
A Wesfarmers spokesman said: "Across the Kmart Group we have made a significant effort to avoid store closures and retain our people and for impacted store team members we have the benefit of time to help find alternative employment opportunities."
He said Katoomba staff will be offered jobs in the Kmart. Winmalee employees may be able to move to other parts of the chain, including Bunnings and Officeworks.
Target in Katoomba opened in June, 2013, as part of a major makeover of the shopping precinct near Pioneer Place. It took over a building which used to house a Franklins supermarket and other retailers.