The group looks set to lose more than £10 million on the sale of its planned store site on the fringes of the Merchant City in Glasgow.
Selfridges, second only to Harrods in the pecking order of London shopping aristocracy, is close to reaching a deal with property fund manager Frogmore to sell the mainly derelict site where it had planned to set up shop.
The price is reputed to be in the region of £5m. The deal will be a major embarrassment to Selfridges, which is thought to have spent more than £15m on its holding.
Frogmore has owned several buildings in the same three-acre block for a number of years.
It is thought Frogmore wants to build flats, a four-star hotel and shopping units and is believed to have reached an informal agreement about the scheme with city planning officials, who have been under pressure from residents and businesses to do something about the site of the former Goldbergs department store for some time.
Since Goldbergs's successor Weisfelds went out of business in 1999, it has been largely unoccupied.
Selfridges's interest in the city waxed and waned in the last decade until it was confirmed in 2010 it had no immediate plans to open in Glasgow, instead submitting a planning application centred around building a car park. At that time it stressed its long-term commitment to the city but said it made no sense to build a store in the current economic climate.
A Merchant City resident who preferred to remain anonymous added: "This site has blighted the area for 10 years and is needed to be built on as soon as possible. We would welcome any improvements."
A spokesman for Glasgow City Council said: "Any planning application on this site will be considered in due course by the council's planning application committee."
Selfridges and Frogmore declined to respond.