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This mini mall department store strategy is actually prevalent in Taiwan. Basically there is a big department store with a bunch of these mini-stores inside of it. The big difference in Taiwan is that when you want to purchase something you purchase it at the mini-store - they are all completely independent operations. I'm not sure if the idea translates as well when the stores aren't independent, because then you are right that getting their own storefront might make more sense.

You can find these types of department stores in Japan: http://www.japan-guide.com/e/e2072.html

This 2011 article about JCP's new strategy also discusses Japanese department stores: http://knowledge.wharton.upenn.edu/article.cfm?articleid=281... (ctrl-F "Japan")

If you're selling $200 jeans (Diesel), you probably want to control the experience down to fine details. But if you're selling $40 jeans (Arizona, Urban Star), smaller presence is cheaper and allows for faster iteration.