When this bit of news flashed across my desk yesterday, the first thing I thought of was the Lionel exclusive locomotives J.C. Penney offered until not so long ago.
After clicking on the link provided by RTraincollector (thanks, by the way), I'd say it's clear O gauge train-related products are on the company's radar at least. The one item I clicked on, Lionel Mickey's Christmas Railroad Shanty, showed it was available in local stores -- probably as part of the existing Disney Collection within the stores.
So, yes, there is an O gauge connection to this thread, and, yes, it is an interesting announcement.
As for the other business aspects and speculation, I would add that the shops-within-a-store concept has been working for Penney's and others. This is an apparent effort to test additional categories. If it works, it will remain. If not, then not.
Finally, don't write off brick-and-mortar retail. Except for the horribly mismanaged Sears Holding company (Kmart and Sears), large retail chains haven't collapsed. Instead, in an online world, they are struggling to find the right balance. Retailers once had to have a healthy position in every mall to maximize their profits. But that density of retailers is no longer valid, given online sales' impact on store traffic. Store closings are inevitable. Chain closings are not, if the right changes are made.