It's interesting but that isn't actually always the case - a lot of cities use oversized blocks (blocks that are both taller and wider than a row of buildings - see Barcelona[1]) if this is the case then large department stores can expand into the courtyard or gardenspace interior of the block and, of course, in a lot of European cities a lot of malls are built vertically and underground - sometimes lying underneath a road with entrances on both sides.
Large stores can work in walkable cities and they do have a place - but they are usually for relatively rare needs (so more likely to be focused on clothes or specialty groceries).
In Tokyo usually the large stores have small footprints but many floors, like the new Ikea in Shibuya (formerly Forever 21) - 7+ floors but each floor is maybe the size of 2-3 boutiques.
Large stores can work in walkable cities and they do have a place - but they are usually for relatively rare needs (so more likely to be focused on clothes or specialty groceries).
1. https://media.istockphoto.com/photos/aerial-view-of-barcelon...