The closure of the 182-year-old store, known by locals as “Kendals” from the days when the shop was owned by Kendal, Milne & Faulkner, will result in the loss of more than 160 jobs.
Staff were told in a meeting on Friday morning that the store would trade through the Christmas period before shutting its doors on 28 January.
Employees learnt of the store closure in a meeting they thought had been called to discuss Christmas opening hours.
A spokesman for House of Fraser said it had explored various options and blamed the landlord for rebuffing the suggestions.
“We have suggested various options to the landlord that would have enabled us to save the store in Manchester. Sadly, these have been declined.
“We are now in consultation with staff about the fact that the store faces closure in the New Year.”
The landmark store, which is thought to have a rent of more than £4 million a year, is a favourite among locals and employees who took to Twitter to express their disappointment at the news of its closure.
The managing director of the San Carlo Group, Marcello Distefano,whose Cicchetti restaurant is based within the store, described the decision as a “very sad loss for the city”.
An employee, Dean Anderson, said the store “is a family” and called for support for a campaign to stop the closure.
Efforts to stop the closure are already underway. Manchester councillors William Jeavons and Patrick Karney have launched a #SaveKendals campaign after visiting the store and speaking to staff who are set to lose their jobs.
Leader of Manchester City Council, Sir Richard Leese, said the council “will do everything it can to try and save the store and the 160 jobs that go with it”.