John Lewis is planning to turn retail space it no longer needs into affordable housing as part of a strategic review of the partnership.
It said it was talking to third parties about "mixed-use affordable housing".
"As we repurpose and potentially reduce our shop estate, we want to put excess space to good social use," said John Lewis chairwoman Dame Sharon White.
Dame Sharon said the pandemic has sped up the shift to online shopping and the business will become "digital first".
"As we repurpose and potentially reduce our shop estate, we want to put excess space to good social use," she said.
John Lewis, which also owns the Waitrose supermarket chain, recently announced plans to close eight of its 50 department stores. putting 1,300 jobs at risk.
In a letter to staff - who are known as partners - Dame Sharon said she expects John Lewis department stores to generate 60% of its business from online compared to the pre-coronavirus outbreak level of 40%.
She said Waitrose's online business will "rise above 20%, from 5%".
Dame Sharon said it will reflect the way that customers, especially younger people, are shopping "with the pandemic accelerating the importance of digital".
A spokeswoman for John Lewis & Partners said it was too early to give details on how excess store space will be used for private and affordable housing. She said there will be a further update in the autumn.
Of its current 50 department stores, four are freehold while the rest are leasehold. Around one third of its 337 Waitrose shops are freehold.
On Thursday, Dame Sharon also set out the issues facing the business, including potentially more redundancies.
The firm has cut around 30% of its senior managers as part of £100m cost-saving drive.
She said it aims to make savings as early as possible this financial year and next, adding: "These are very difficult decisions and I deeply regret the personal impact on partners."
Dame Sharon also said that profits this year and next are likely to be challenging and it will take between three and five years for them to recover.
But she said: "The strategic review should see green shoots in our performance over the next 9-12 months."
As part of the review, the firm said it will expand into providing services, including horticulture.
It plans to expand its existing garden and "outdoor living" businesses as well as its Leckford Estate and the Waitrose Farm with with new partnerships and acquisitions.
Leckford Estate in Hampshire was bought more than 90 years ago by the retailer's founder John Spedan Lewis and spans 2,800 acres. The Waitrose Farm has cows that produce milk for the supermarket's Essential range. It also grows mushrooms and has a vineyard which produces sparkling wine.
Dame Sharon also said Waitrose stands "in very good stead for the end of our Ocado relationship in September". Ocado delivers Waitrose products to shoppers. However, when the deal ends Ocado will switch to delivering online orders for M&S.
Waitrose plans to increase its online shopping slots from a current 160,000 a week to 250,000.