Marks and Spencer is unlikely ever to return to its "halcyon days" as the UK's top clothing retailer because competitors are rushing to offer shoppers more choice, according to consultancy Retail Intelligence.

M&S, due to report on Christmas trading on Wednesday, once held a pre-eminent position in Britain, with a market share of 16 per cent and operating margins of more than 13 per cent.

But Retail Intelligence said this had been eroded by more nimble competitors from the US, continental Europe and from Britain.

M&S, struggling to recover from a steep profit downturn, is expected to have performed poorly over Christmas, with some analysts expecting its trading update this week to include a profit warning.

Retail Intelligence predicted the British and European clothing sector was ripe for consolidation.

"There is still plenty of scope for consolidation within the sector, as very few of the leading groups can claim genuine panEuropean coverage."

The arrival of US retailer Wal-Mart in Europe has proved to be a catalyst for change in the food retail sector and could have a similar effect on clothing now the US giant has British supermarket Asda's George clothing range in its portfolio. The consultancy said the European clothing market in general was struggling to hold its own against an ever-widening range of goods and services.