The ABC will cut 300 jobs and close 50 stores nationwide as diving sales force it to become an online shopfront.
Some shops will be shut by Christmas, as the public broadcaster begins ending leases with landlords and making redundancies.
"There will be significant job losses... it's a sad day for them," said the ABC's managing director Mark Scott on Thursday's announcement.
Dwindling DVDs and CDs sales had made it impossible for the stores to continue operation amid a "changing retail environment", said the public broadcaster in a statement.
The ABC's retail revenue has traditionally been reliant on products like DVDs, music, books, magazines, toys, novelties and clothing.
However digital downloads, online subscriptions and bootlegging had squeezed the profit margin making the shops no longer sustainable.
"They've made a lot of money over the years but they're not making money now," said Mr Scott.
He confirmed that funds from the broadcasting division would not be used to prop up or "cross-subsidise" the struggling retail operation which would be remoulded around online selling.
The 78 ABC-branded kiosks in retail outlets like department stores Myer and David Jones would remain but could also be affected by the switch.
Retail bodies and unions have decried the loss of jobs, with the head of the Australian Retail Association calling it an "extremely disappointing" decision.
"I accept that this is partly a result of disruptive technology and that retailers have got to re-invent themselves to ensure their longevity," said ARA president Russell Zimmerman.
"However consumers should have a choice (between physical and online stores)," he said.
The unions called on ABC management to "come clean" on what other jobs would face the chopping block.
The broadcaster's commercial sacrifice comes on the back of a $254 million funding cut and the announcement of 400 job losses.
