Retail chains venture into virtual worlds

NEW YORK (Reuters) - It's a world where users pick their names, their sex, their clothes and even the time of day.

It is also becoming a world where users can stop by the Sears showroom to see how a new Kenmore refrigerator would look in their kitchen, or visit Circuit City to check out that sleek new plasma television.

Welcome to Second Life, a three-dimensional virtual world developed by San Francisco-based Linden Lab that has more than 2.5 million registered animated characters or avatars, an estimated 300,000 regular users, and its own economy and currency.

A number of real-world companies have entered Second Life in recent months, including Reuters Group Plc <RTR.L>, drawn by its rapid growth and pool of tech-savvy consumers. Retailers are determined not to miss what could be a chance to attract new customers and spread their brands.

This month, Sears Holdings Corp. <SHLD.O>, in partnership with International Business Machines Corp. <IBM.N>, unveiled "Sears Virtual Home," a showroom on Second Life. Circuit City Stores Inc. <CC.N> also built a showroom with IBM's help.

"Retailers have got to think outside the box because shopping as we know it is changing," said Britt Beemer, chairman of America's Research Group, which surveys consumers on spending habits.

But some industry watchers are warning that the popularity of the virtual world could provoke a backlash. Gartner Group analyst Steve Prentice said earlier this month that Second Life was "heading toward the peak of the hype cycle" and could face growing disillusionment some time this year.

SEARCHING FOR NEW SHOPPERS

In a market flooded with too many stores chasing too few dollars, retailers constantly struggle with ways to grab shoppers and stand out in the crowd.

While retailers have put millions of dollars behind their Web sites, they are realizing there are many more ways to reach out to potential shoppers, who may be elsewhere online.

Consumers are flocking to networking sites like MySpace and YouTube, while others sign on to virtual worlds like Second Life.

Similar to the original city-building game SimCity, Second Life is a virtual 3-D world where users create and dress up characters, buy property and interact with other players -- like a parallel universe that exists on the Internet.