The Target store at Katoomba will close early next month, in preparation for its makeover into a Kmart shop, or a K Hub as it will be known.
The doors will close on February 6 and conversion works start a few days later. It is hoped the new K Hub will open by the end of February.
The store is one of 53 across the country which are being revamped into K Hubs. It follows a decision by owner Wesfarmers in May last year to either convert or close up to 167 Targets to reduce its "unsustainable cost base".
John Gualtieri, retail director of Kmart Australia & New Zealand, said the hubs were part of the company's "mission to make everyday living brighter for Australian families. Giving them easy access to the everyday items they need, at the lowest possible price. It's how we make shopping more accessible for more people.
"As a business we're committed to opening stores in new communities and we can't wait to welcome the community of Katoomba to our brand-new concept K Hub store."
Mr Gualtieri said the new shop would look a little different to the usual Kmart.
"We're giving the store a 'light touch' makeover for now, so that we're not inconveniencing the community with a long store closure. We want our customers to have easy access to the items they need ... which is why we're focusing on speed to market. But we have big plans to evolve the look and feel of this store over time."
In the early stages, the hub will feature a smaller collection of the most popular Kmart products across kids, home and clothing.
K Hub customers will be also be able to shop Kmart's entire product range online using home delivery or click and collect services.
"We'll be using our hub store as a collection point for online Target orders too, giving customers easy access to two of our key Kmart Group brands," Mr Gualtieri said.
Lower Mountains residents will not see a hub in their future. The Winmalee Target will be closed permanently on March 13.
A Wesfarmers spokesman said all Target team members had been offered the opportunity to work in the Kmart store at Katoomba and Winmalee employees may be able to move to other parts of the chain, including Bunnings and Officeworks.
Target in Katoomba opened in June, 2013, taking over a building which used to house a Franklins supermarket and other retailers. It started life as a Country Target but the "country" brand was quietly removed some time later.
There was a large Kmart store in Katoomba for nearly 30 years, next to Coles on the site which now houses Woolworths and Big W. That Kmart closed in November 2012.