Can Oxford Street compete with the cybermall?

Taken from the Royal Society of Arts Inaugural Lecture, given by Stuart Hampson, the John Lewis Partnership chairman

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When John Lewis was setting up his business in 1864, he seemed to ignore those three golden rules of retailing: "location, location, location". His shop selling silks for dressmaking was opened between a brush-maker and a dentist in an unfashionable part of the capital called Oxford Street.

When John Lewis was setting up his business in 1864, he seemed to ignore those three golden rules of retailing: "location, location, location". His shop selling silks for dressmaking was opened between a brush-maker and a dentist in an unfashionable part of the capital called Oxford Street.

Perhaps through good luck, but also through his own reputation and the natural tendency of traders to cluster together, Oxford Street has become one of the top shopping locations in the world, and we know how much benefit we draw from having our flagship department store in such a prime pitch. In the same way, Church Street, Liverpool, Eastgate Street, Chester or Argyll Street, Glasgow have been recognised as "prime pitch". It's been the same story on high streets up and down the country, as everyone has recognised where the buzz of shopping is strongest and where it is secondary. That was when retailing was relatively easy. You knew where you had to be, and as long as you pitched your shop in the right place you were in with a chance of making money.

Then, in the 1980s the rules began to change. A combination of increased car ownership and looser planning produced an explosion in out-of-town shopping. Northumberland Street, Newcastle - the place to be in the north-east of England - suddenly had to face the challenge of a former slag heap which had been transmogrified by marble and potted palms into the gleaming new Metrocentre.

Retailers could no longer rely on their own originality and shopkeeping skills. Their ability to win customers depended on whether the roads flowed freely and how rapacious the local authority was in fixing car-parking charges. The traditional prime pitch was no longer quite as prime, and the buzz on many high streets settled to a gentler drone.

But before retailers could even settle to this changed pattern we have entered a new competitive age. "The competitor you can't see" - e-commerce - is still in its infancy, and shopping on the net remains a minority activity, with rudimentary equipment available to the shopper and cumbersome processes offered by the seller. But this is like listening to the scratchy sound emitted by an early wind-up gramophone and saying that recorded music will never catch on. The speed of development of digital technology means that we won't be waiting the best part of a century for the equivalent of the move from stylus and megaphone to CD mini-system and surround-sound. Looking to the future, location, location, location will not be enough to guarantee retail success. In the third phase of retail competition, "experience, experience, experience" will be what matters.

Retailers have to recognise the importance of "time-starvation" and decide what this interest in "experience" means for them. First, it means new competition for disposable income: consumers choose to catch the Eurostar to Paris for the day or for the weekend when we know they should be doing the decent thing and shopping in Oxford Street! Theme parks and restaurants also compete for the customer's pound. Secondly, bricks and mortar retailing will have to offer a better experience than the alternative of sitting comfortably in front of an internet-linked television set that recognises your voice and answers your questions.

I'm not predicting a retail melt-down and the end of civilisation as we know it. Even the most excited forecasters talk about 25 per cent of sales moving to electronic channels, and more normal predictions for the next decade are about half that. So the physical tills will still jingle. But some sectors will be more affected than others.

Location, location, location or experience, experience, experience? The traditional bases of activity and sources of advantage are challenged by new opportunities for wider and better communication and interaction. Yet the significance of personal contact cannot be replaced by technology.

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