It depends who they used as a carrier and how they sent it. With Royal Mail, I'd be surprised if they could tell if it was lost or not. You can only track Royal Mail stuff if it sent recorded delivery or special deliver. For recorded deliveyr all the website will tell you is whether it's been delivered or whether it hasn't. I haven't used SD so I'm not sure how much more detail that gives you.
I have had two recent problems with things I sent getting lost in the post. Both were caused by backlogs because of the postal strikes, and both turned up eventually. Could this be the problem with yours - how long ago was the package sent?
I would ask them who the carrier was, and also ask for the tracking number so you can check online.
If it was Royal Mail, they have a set number of days before they will consider an item "lost". For Recorded Delivery this is 15 working days (ie Mon-Fri) after the item should have been delivered. So in practice, the best part of a month. For SD it's a little shorter. The maximum they will pay in compensation for SD packages is £39. I think your best route is to get the tracking information and follow it up yourself, and ask the retailer for a full refund if it looks like it's not going to arrive. They can then claim from Royal Mail for the wholesale price. Hopefully though, it's just a case of a glitch on the retailer's tracking website. I hope it turns up soon for you.