Entertainment retailers of all sizes must adapt to offer better online services or else face being left behind, a leading industry expert has said.

With the advent of music downloads as well as video-sharing and social networking sites, the entertainment industry has undergone massive changes in recent years, and figures for consumer spending on music, video and games, released by the Entertainment Retailers Association (ERC), now amply demonstrate this.

The ERC statistics show that while the value of the high street entertainment market fell by six per cent from £5.4 billion to £5.1 billion during 2005 and 2006, the online marketplace expanded from being worth £39 million to £89 million over the same period.

In the wake of these changes Richard Dodd, spokesperson for the British Retail Consortium, has warned that smaller entertainment businesses must quickly adapt to technological advances if they are to secure their long-term financial futures.

"There's a whole repertoire of technological changes that are happening and have been happening for decades," said Mr Dodd.

"The latest development is buying music and so on via downloads rather than actually going [to a shop], and that's obviously having an impact on traditional retailers who are having to look at new ways of selling that material to secure the future of their businesses.

"One time it was records and videos, then it was DVDs and CDs, now we're moving on to downloading and [retailers] have to again look at how they reinvent what they do in order to secure their futures."

According to recent survey by Connect, the two biggest IT headaches for businesses were 'everyday hassles with IT' (37 per cent) and 'security concerns' (32 per cent)