Myer chief executive Bernie Brookes says the traditional big retailers will overcome their reluctance to adapt to the internet by becoming the top 10 shopping sites within five years.
Mr Brookes on Friday admitted that Australian retailers had been slow to move into online shopping, due partly to the higher costs involved in delivering goods in a geographically large country with a relatively small population.
"There's a diseconomy in the lack of population and a diseconomy because of the tyranny of distance, so that's been a barrier to entry," he told a business lunch in Sydney.
Mr Brookes said that it was easier for US and UK businesses to start trading on the internet because many already sold through catalogues.
Australians instead often shopped as a social outing.
He said Australian retailers were quickly catching up with their online offerings and predicted that in the next three to five years the most popular would be local department stores.
"If we produce a list in three years' time of the top ten internet sites in Australia, it will be dominated by Myer, DJs, Kmart, Target, the Just Group, the existing group of retailer" he said.
"That's exactly what's happened in the US and the UK.
"Out of the top 20 retailers in the US online about 16 of them are bricks and mortar retailers."
The recent National Australia Bank Online Retail Sales Index showed that online spending in Australia in June was up 19 per cent from June 2011.
By comparison, bricks and mortar sales rose by 4.2 per cent in June 2012 compared with the same month in 2011.
A Roy Morgan study released earlier this month also showed that early adapters of online retailing have reported revenue growth in the past year, while those that were slower to embrace internet selling had gone backwards.
Mr Brookes said customer service was still an important part of the retail business and admitted that he made a mistake in his first few years as Myer boss when he slashed staff numbers to cut costs.
He said over the past few years Myer had increased staff numbers and implemented more training to improve customer service.