Fashion is usurping football as Liverpool's obsession, says Jackie Grant, head of womenswear at Wade Smith, the mini-department store that has brought designer labels to the city.

Three years ago, Liverpool's fashion-conscious had a choice of Warehouse, Miss Selfridge or a train ride to Manchester. Today, they have Smith & Westwood in Clayton Square (selling a lively mixture of Paul Smith for men and Vivienne Westwood for women), a handful of shops such as Drome and More Cherubs in the Cavern Walks shopping centre (selling international and local designer labels) and Wade Smith.

Indeed, Liverpool is competing with Manchester and Leeds for supremacy in the fashion market. Despite its image as a run-down and depressed city, its people are prepared to pay high prices to dress well. Staff at Wade Smith, whose annual turnover is a staggering pounds 5m-plus, never cease to be amazed by 16-year-olds spending more than pounds 150 on a pair of Versace jeans.

As well as four floors of diffusion lines, womenswear, menswear, shoes, sportswear, trainers (a whole floor to themselves) and children's sportswear, the store has a small, exclusive showroom frequented mainly by footballers and local businessmen, and offering suits by Jasper Conran and Montana. When opened in 1988, Wade Smith comprised just two floors of sportswear and menswear, with a small selection of womenswear.

From the beginning of the Eighties, Robert Wade Smith and Neal Cowan, the financial director, built up a chain of 10 shops selling continental trainers. Their three premises in Merseyside were bringing in 80 per cent of the profits, so Liverpool seemed the natural place to build a mini-fashion empire. Wade Smith sold the shoe outlets and invested in the property on Mathew Street, hoping that the area might develop into Merseyside's Covent Garden. His gamble soon paid off.

In the cavernous basement devoted to womenswear and shoes, labels include that of designer of the year John Rocha, Ghost, Future Ozbek, Moschino Cheap & Chic, State of Montana, Versus and Gaultier Junior - one of the largest collections of diffusion lines under one roof, and boasting more than 300 different styles of shoe.

Ms Grant points out that 'people don't want pounds 29.99 court shoes any more. They are prepared to pay for originality and quality'.

Jeans form a vital part of the Liverpool man's wardrobe, and they have to be the best (Armani's sell at pounds 95 a pair); and he can choose from the largest selection of men's shoes the city has ever seen (more than 50 pairs of brands such as Church's, Timberland and Patrick Cox are sold each day).

'We put emphasis on continual improvement,' says David Wade Smith, Robert's brother, who joined the company after 10 years with the Burton Group. Every year since 1988, a new floor or department has been opened to satisfy demanding customers.

Camille Aryeetey, the womenswear buyer who started her career at a Wade Smith shoe shop six years ago, wants to open a showroom within the store, similar to the one for men. 'I take inspiration from shops like Joseph,' she says. Her next step will be to introduce labels such as Dolce & Gabbana and Donna Karan.

Liverpool's attitude to labels is very Italian: brand names and status are all-important. A Future Ozbek suit will sell better than one by State of Montana, because it is more obvious who the designer is. 'I wouldn't say Liverpudlians are label-crazy,' Robert Wade Smith says, 'but they like to have the best. A bit of status makes you feel better.'

Wade Smith, Mathew Street, Liverpool (051-255 1077).

(Photograph omitted)