"We're changing our shopping habits", he said.
They have pinpointed business rates as their biggest bugbear, labelling the tax archaic and not fit for objective in the light of online competition.
"Today's £780 million investment will support innovators across the country to create the technologies of the future, and the better, highly-paid jobs we urgently need".
"The nature of the offer on the high street is going to change over time".
A string of retailers have failed this year as they come under growing pressure from a drop in sales and soaring costs including business rates and rents, prompting warnings of the death of the high street.
Mr Hammond, who was in the West Midlands, said: "We are working hard to build a stronger, fairer economy - dealing with the deficit, helping people into work, and cutting taxes for individuals and businesses".
Speaking in Coventry today, the Chancellor said that taxation needs to be "fair" between traditional retailers and online firms - including negotiating worldwide rules for web retailers. "There's going to be less retail, more leisure, bars, community facilities".
The Chancellor said that a change in the system "requires us to renegotiate global tax treaties because numerous big online businesses are worldwide companies".
"If we can't get worldwide agreement to do this we may have to look at temporary tax measures to rebalance the playing field until we can get global agreements".
He said this could include a tax on online platform businesses based on value generated, as has been mooted by the EU.
He made the announcement as figures showed the UK's GDP (gross domestic product) was up 0.4% between April and June, compared with the first three months of the year.
The Chancellor of the Exchequer, Philip Hammond, said:We are backing innovative British companies to grow and create jobs, as we build an economy fit for the future.
"You will not have quite the same amount of access to the European Union but we will have the freedom to develop relations with countries outside the European Union".