The internet won't kill shops, but it's already forced them to adapt and will continue to do so, potentially reducing the number in the process.
Physical shops have a number of advantages that online retailers will never be able to claim on:
- Browsing - I can easily walk through a shop and have a look at what's on offer, what sort of things they have available, and when I see something pick it up, feel it, play with it etc. I can't do that online.
- Trying things on - Clothes shopping will always have an offline advantage for trying things on. Yes, while there are sizes and I know what size I am, for some bizarre reason a pair of 40 inch shorts can be 38 inches in one place and 42 inches in the other, with no real way to tell (apart from bad experience!)
- The "have it now factor" - When my computer mouse broke the other month, I needed a new one there and then. I didn't want to grab one online and hope I just about made the deadline for next day delivery, I wanted one I knew I could have that very day.
- Delivery costs - while the savings that companies get from not running a warehouse mean that this is offset for small items (think books, dvds, play.com style) it's never going to cover the costs of a weekly shop for a large family. Sure, some people do shop for food online but you almost always have to pay more for it, and for that reason the majority of people will go to a supermarket instead of taking the online route.
- Some shops, like coffee shops, are selling the experience more than the goods. There's the social aspect, the environment, etc. - stuff that you just can't get online.
There's many more things that I can think of in this regard, but the short answer is that as things currently stand the internet won't kill off shopping in general - though it will certainly force existing shops to adapt further.