The store will be one of the 10 to 40 Target and 52 Target Country outlets to be transformed into a Kmart.
Between 10 and 25 large Target stores and 52 smaller Country Target stores will close completely in the next year.
Wesfarmers managing director Rob Scott said these moves would address the "unsustainable" performance of Target, while accelerating the growth of Kmart.
“For some time now, the retail sector has seen significant structural change and disruption, and we expect this trend to continue,” he said.
“With the exception of Target, Wesfarmers’ retail businesses are well-positioned to respond to the changes in consumer behaviour and competition associated with this disruption.”
Mr Scott said the reduction of Target stores would be complemented by an increased investment in online services, such as home delivery and click and collect.
All team members in Target stores being converted to Kmart will get a job offer from Kmart, while those affected by store closures will be given consideration for new roles in Kmart and online store Catch.
Wesfarmers has also established a working group to identify redeployment opportunities to take up jobs in Bunnings and Officeworks.
Employees who are unable to be redeployed will be provided with access to support services along with all entitlements.
Echuca and Kyabram stores will also be converted into Kmart, Benalla Target will close completely, while the Shepparton Target store will remain.