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Last Updated: Monday, 23 August, 2004, 09:35 GMT 10:35 UK
M&S loses clothes crown to Asda
Models dressed in George clothing
Asda has managed to undercut rivals on price
Marks & Spencer, a stalwart of the UK High Street, has lost its crown as the country's largest clothing retailer.

Asda, the supermarket chain owned by US retail giant Wal-Mart, said it had taken top spot, increasing its market share in the three months to 25 July.

Asda now has 9.4% of the UK clothing market, compared with M&S's slice of 9.1%, research firm TNS said.

Asda would not confirm the figures, but said it was now the "number one" firm; M&S declined to comment when contacted.

Close eye

The data was released last week in a confidential industry report and will once again turn the spotlight on M&S's struggle to revive its sales.

The Marks & Spencer brand is just not good enough on its own any more
Rene Carayol, business consultant

New chief executive Stuart Rose recently won the backing of shareholders with his promise to shake off the company's poor performance.

Investors are notoriously impatient and Mr Rose will have his hands full invigorating a brand that many critics say has lost touch with its customers.

Adding to the pressure is the heightened competition in the retail industry, especially after billionaire businessman Philip Green vowed to wage a High Street war on M&S after his takeover bid was rejected.

Asda, meanwhile, has benefited from surging sales of its George clothing brand.

The company now sells George clothing worldwide and in the UK it has annual turnover of about 1bn, a spokeswoman said.

Next-founder George Davies was behind the launch of Asda's clothing range in 1990 but in 2000 he teamed up with M&S to develop the Per Una brand.

As part of its fightback strategy, M&S is buying the Per Una business from Mr Davies for 125m.

Purchasing muscle

Asda put much of its recent success down to a number of factors, including listening to customers and buying in bulk.

Marks & Spencer CEO Stuart Rose
M&S chief Stuart Rose faces a tough task

Better economy of scale means that the company has been able to purchase fabrics, such as denim and fleece, at far lower prices, the spokeswoman said.

As a result, Asda now sells a pair of denim jeans for 4 in the UK.

"Asda has remained focused on giving appropriate customer service, shopping with convenience and, most of all, delivering the right price, and they've done it fantastically," Rene Carayol, a business consultant and former executive at M&S, told BBC Radio 4's Today programme.

"If we look at the differences in price from Asda to M&S, it's quite phenomenal.

"We're facing a world where customers are more discerning and the Marks & Spencer brand is just not good enough on its own any more."

M&S has not said whether it has any plans to enter a pricing war with rivals, though it is to simplify its product range and shop layouts, close the so-called Lifestyle stores, cut jobs and return money to shareholders.

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