Target has revealed that it is going to spend an additional $1bn in 2018 to keep up with rivals Walmart and Amazon.
The announcement comes as the discount chain posted strong sales results in its fourth fiscal quarter, noting that comparable sales roles were up 3.6% during the critical Black Friday and Christmas period that ran from November to January.
The retailer also reported a 3.2% increase in foot traffic and online growth of 29%, which was ahead of analyst estimates.
Target said that the extra spending will include raising employee pay from $11 to $12 an hour, remodelling over 300 stores and building around 30 new small stores.
The US company also intends to accelerate e-commerce growth by expanding its home delivery thanks to its newly acquired Shipt stores.
In the competitive retail market, Target also said that it was going to expand its Drive Up offering to around 1,000 US stores this year.
This programme allows customers to order items through the company’s app, drive up to a store and employees will bring the purchases out to their car.
“Our fourth quarter results demonstrate the power of the significant investments we’ve made in our team and our business throughout 2017,” said Brian Cornell, chairman and chief executive officer of Target Corporation.
“[We plan] to continue investing in our team and make 2018 a year of acceleration in the areas that set Target apart- our stores, exclusive brands, and rapidly-growing suite of fulfillment options.
He added: “While we have a lot left to accomplish, our progress in 2017 gives us confidence that we are making the right long-term investments to best position Target for profitable growth in a rapidly changing consumer and retail environment.”