Major retailers across the U.S. are accelerating investments in store remodels and expansion as competition intensifies between physical retail and rapidly growing e-commerce channels.
U.S. online retail spending reached $1.34 trillion in 2024 and is projected to surpass $2.5 trillion by 2030, according to Capital One Shopping.
Yet, physical stores still dominate global retail spending. Brick-and-mortar locations generated approximately $14.4 trillion of the $18.9 trillion in total retail sales in 2025, according to Euromonitor research compiled by EY.
That dynamic is reshaping retail strategy, with stores increasingly serving as fulfillment hubs, customer experience centers, and digital support networks.
Walmart’s store investments highlight broader retail trends
Walmart (WMT) remains one of the most prominent examples of this shift. The company has heavily invested in its U.S. store fleet through its “Investing in America” plan, a multi-million-dollar initiative that includes remodels, new Supercenters, and its “Store of the Future” concept.
In the fourth quarter of fiscal 2026, Walmart reported $190.7 billion in revenue, up 5.6% year over year, with Walmart U.S. net sales increasing 4.6%, underscoring continued momentum behind its physical retail strategy.
Target commits more than $5 billion to store expansions and remodels
To remain competitive, Target (TGT) is making a major push to modernize and expand its store network.
In 2026, the company revealed plans to invest approximately $5 billion to remodel more than 130 existing stores and open 30 new locations across the U.S. The expansion targets 10 key metro areas, including Atlanta; Austin, Dallas and Houston, Texas; Charlotte, North Carolina; Chicago; Phoenix; Los Angeles; Miami, Florida; Minneapolis; New York City; Philadelphia; and Washington, D.C.
“These investments are all about making Target an even easier, more inspiring and friendly place to shop,” said Target Properties Senior VP Laurie Mahowald in the company announcement. “We’re evolving our stores in ways that reflect how guests shop today — from more intuitive layouts to expanded assortments — while also strengthening the role our stores play in fulfillment and our long-term growth.”
What Target is changing inside its stores
Target’s remodels focus on improving store navigation, increasing product visibility, and integrating digital and in-store experiences more seamlessly.
Key changes include:
- Expanded grocery, pantry, fresh, and frozen food selections
- Updated layouts to improve navigation and product discovery
- Modern décor, LED lighting, and updated signage
- Enhanced merchandise displays across apparel, beauty, accessories, and home
- Faster fulfillment improvements for Order Pickup, Drive Up, returns, and checkout
- Upgraded guest amenities, including restrooms and nursing spaces
- Sustainability upgrades such as energy-efficient HVAC systems and LED lighting in select locations
Why Target views physical stores as a competitive advantage
Target’s strategy reflects a broader shift in retail toward blending physical stores with digital fulfillment capabilities.
The company reports that about 76% of U.S. households are located within 10 miles of a Target store, making its physical footprint a key advantage for services such as Drive Up, Order Pickup, and same-day and next-day shipping.
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The initiatives reflect a growing industry push to use stores as last-mile fulfillment assets, helping retailers reduce delivery costs while increasing speed and convenience for customers.
Target also notes that remodeled stores typically deliver a low- to mid-single-digit sales lift, along with higher customer traffic and increased engagement, making remodels a key driver for long-term growth.
Target’s financial performance highlights strategic pressure
The heavy investments come as Target works to reverse slowing growth and declining sales.
In the fourth quarter of fiscal 2025:
- Net sales dropped 1.5% year over year.
- Operating income fell 5.9%.
- Comparable sales were down 2.5%.
- Target saw its fourth consecutive quarter of declining store traffic.
In-store comparable sales decreased 3.9%, while digital increased 1.9%, reflecting continued channel shift toward e-commerce.
“Our team is firmly focused on writing Target’s next chapter of growth, rooted in strengthening our merchandising authority, delivering an elevated and differentiated shopping experience, advancing our use of technology, and continuing to serve and invest in our team and communities,” said Target CEO Michael Fiddelke in the earnings report.
Despite declines, categories such as Food & Beverage, Beauty, and Toys delivered net sales growth, while Essentials and Home improved relative to the prior quarter, supporting Target’s emphasis on grocery expansion and merchandising upgrades.
Target’s multi-year growth strategy
Alongside its March 3, 2026, earnings release, Target unveiled a broader multi-year plan designed to restore sustainable growth through store modernization, technology investment, and workforce development, according to the company announcement.
“This new chapter of growth at Target is defined by clear choices and rooted in a deeper understanding of our unique lane in retail, the guests we serve and the areas where we’re distinctly positioned to win,” said Fiddelke in a statement.
The strategy is built around core priorities:
- Differentiate merchandising with curated assortments focused on style, design, cultural relevance, and value.
- Elevate the guest experience through improved in-store layouts and digital discovery for stronger loyalty engagement.
- Accelerate technology by improving personalization and making fulfillment systems more efficient.
- Invest in the workplace and community by expanding training, career development, and employee support initiatives.
Why physical stores still matter in modern retail
Target’s investments reflect a broader transformation in which physical stores are being redefined as hybrid spaces that combine shopping, fulfillment, and brand experience.
Industry experts note that stores continue to play a critical role in retail profitability.
“It’s clear that the physical store still plays an important role,” said EY Global Retail Leader Malin Andrée and Consumer Senior Analyst Jon Copestake. “Not only do stores have plenty of runway left in delivering revenue, but they also have opportunities to drive new growth and alternative revenue streams and, by working in tandem with digital channels, they can maximize returns on investment.”
Target’s $5 billion investment program signals a clear strategic shift where physical stores remain central to retail growth, but their role is rapidly evolving. Rather than serving solely as transactional spaces, stores are becoming critical components of a broader digital-physical retail ecosystem designed to drive convenience, engagement, and long-term customer value.
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