Harvey Norman will close its Westfield Woden store in two weeks with 36 staff members being offered either redundancy packages or being relocated to other stores.
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Chief operating officer John Slack-Smith said the retailer had decided not to renew it lease after 30 years of trading at Woden.
Harvey Norman's senior executives told franchisees as well as floor and warehouse staff on Monday that the decision was based ''on commercial grounds''.
Mr Slack-Smith said they were working through opportunities for redeployment, although it would not be known for at least a week whether all staff could be found jobs or offered redundancies.
''We have two significant businesses in Fyshwick, one under the Harvey Norman banner, and the second one under the Domain banner.''
He said the Fyshwick store's trading was in the top handful of Harvey Norman's network Australia-wide.
The Harvey Norman outlet at Westfield Woden is on a mezzanine level and is smaller than the retailer's average stores.
In contrast to peak trading times when landlords could demand premium rents, weaker turnover has eased pressure on rents.
The pendulum has swung in favour of retailers who can drive harder leasing deals for concessions and fit-outs.
Myer said in December it would be closing its doors on two levels at the Tuggeranong Hyperdome and opening at Westfield Woden by the end of 2013.
Earlier last year, Westfield group managing director Steven Lowy said Woden would be upgraded and expanded similarly to the $125 million revamp of Belconnen Mall, but could not say when.
Westfield has $1 billion invested in Belconnen Mall and Woden Mall which it owns jointly with General Property Trust.
Mr Slack-Smith said Harvey Norman was not in a consolidation frame of mind in the ACT.
''In the retail industry, having a growing store presence is important to the overall model,'' he said.
''So if your strategy is to contract then all you are doing is increasing the potential opportunity or risk of allowing your competitors to grow.
''The decisions about closing stores or reducing your footprint are ones not taken lightly, because we absolutely want good old-fashioned economies of scale where we've got lots of shopfronts.''
Shopping Centre Council of Australia executive director Milton Cockburn said retail sales were growing at a lesser rate compared with the past two decades, causing many retailers to review operating costs, including leasing.
Listed retailers had indicated they intended to close marginal stores and involuntary closures had included Borders and Angus and Robertson.
''The demand for retail space is not as intense as it was two years ago.''
But major listed companies had indicated extraordinarily high occupancy levels, including Westfield at 99.5 per cent.
