Australia's biggest retailer said the store at Westfield Woden would close on Sunday, the second major chain store to be shuttered at Woden in as many months. Harvey Norman closed last month.

The 25 staff at Woden have already been allocated jobs in Woolworths-branded stores elsewhere in Canberra, a company spokeswoman said.

The Fyshwick store, which has nine staff, would close its doors in "eight to 10 weeks time," a Woolworths spokeswoman said, after a "liquidation sale".

A decision on the four other Dick Smith stores in Canberra – Belconnen, Gungahlin, Tuggeranong and the Canberra Centre – was still a few months away, the spokeswoman said.

Woolworths announced in January it planned to sell the Dick Smith chain after a review found sales of consumer electronics would be better delivered through its Big W stores and online.

The plan also involves closing up to 100 of the 386 Dick Smith stores in Australia and New Zealand.

Westfield, the world's largest owner of shopping malls, said it would make an announcement in due course on a retailer to replace Dick Smith at its Woden shopping centre.

"Retailer turnover at shopping centres is a normal part of business and replacing outgoing retailers with new ones is an opportunity to invigorate the mall and meet evolving consumer demands," a Westfield statement said

The founder of the chain in the late 1960s, entrepreneur Dick Smith, said the price of consumer electronic equipment, such as TVs, had fallen by so much that margins were squeezed to the point where there was "simply no room to pay anyone to sell it".

"You can buy the thing directly from overseas and not even pay tax," Mr Smith told The Canberra Times. Another alternative would be to "grab a box from a pallet" at a Costco-style giant warehouse.

The Australian Retailers Association executive Russell Zimmerman warned on Wednesday that retailers were hurting from high employment costs, such as weekend penalty rates, expensive rent in shopping malls and the GST exemption on overseas purchases up to $1000.

Mr Smith said: "The retailing of electronics, as we've known it in the past, which would be the JB Hi-Fis, the Harvey Normans and the Dick Smiths, I believe, won't exist in the future."

Federal governments have decided to allow Australians to import items up to $1000 without tax and to keep the country's high wage structure, said Mr Smith, and "that means you won't have any of those businesses anymore".

"And the Aussies left employed will be courier drivers," he said. "We'll be courier driving from the airport the items that we bought from overseas without even having paid tax.

"What's never mentioned is how do you pay for the teachers, police and hospitals when the government encourages us to avoid tax?"