Town centre shopping in Dudley was devastated when Merry Hill - currently ranked in Britain's Top 20 retail destinations - opened its doors in nearby Brierley Hill.

Now retailers in the town are at the centre of a fight to win back lost trade as Dudley becomes a guinea-pig in a Governmentbacked project to use retail development as a method of stimulating urban regeneration. Dudley is the only Midland town among 12 locations which have been chosen to take part in the Under-served Markets Project, which is being partly funded by the #975 million Neighbourhood Renewal Fund operated by the Office of the Deputy Prime Minister.

Similar initiatives have already proved highly successful in the United States, especially in New York's Harlem district, south Chicago and LA's South Central district.

Such is their success that US regeneration specialist Bill Boler, who has spearheaded a number of retail-led regeneration schemes in his country, has been appointed to head the project in the UK.

He spent 12 months conducting extensive research before naming the 12 target areas, which also include Barnsley, Bradford, Lewisham and Salford.

"Retail is an important industry. It has the power to regenerate communities and is an engine that should be harnessed," says Mr Boler, whose target towns have one common characteristic - they have all been identified as having above-average potential growth in local retail demand over the coming years.

"That is certainly the case as far as Dudley is concerned," says Simon Handslip, a retail specialist with property consultancy King Sturge, whose Birmingham office represents Retail Ventures, which owns The Trident Shopping Centre, Dudley.

"Significant redevelopment has taken place over the last couple of years or so and other important schemes, such as the regeneration of the Dudley Zoo site, are in the pipeline.

"With the redevelopment has come a revival for local high street shopping and to keep pace with future demand, Retail Ventures has invested almost #2 million in a major refurbishment scheme of The Trident Shopping Centre."

The Trident, which has entrances on High Street and Wolverhampton Street in Dudley town centre, attracts more than 100,000 shoppers every month. It is anchored by discount retailer B&M Retail, whose 17,000 sq ft store is one of 20 within the #90 million turnover B&M Group.

Popular clothing retailer Bewise has 5,000 sq ft of space, while other recent tenants include speciality retailer Pounds Around, which has taken 348 sq ft of space. The latest occupier to move into The Trident, which has 180 underground parking spaces, is Cheswick Coffee Shop, which has taken 1,300 sq ft of space.

Manageress Sue Oldaker says: "As a new business enterprise, we felt very much at home with the spirit of regeneration that is now being created in the area.

"The Trident was an ideal base from which to launch ourselves and we are very pleased with the way that trade has developed in the three months or so since we opened."

Mr Handslip says: "When Merry Hill originally opened it pulled everyone away from Dudley town centre.

"However, with the Government now anxious to repeat tried and tested US methods of using retail development to lead regeneration in selected urban areas such as Dudley, it is to be hoped that new retailers and investors will switch their attention to the town.

"In the US, areas like Harlem had to overcome the negative perceptions that investors had of the district. The same could be said of some of the areas in the UK where investors, for instance, have to be convinced that investment is a viable proposition.

"The initiative in Harlem, however, is being hailed as a success and part of its regeneration activity included the development of a 63,000 sq ft shopping centre - the first new commercial property development project in the area for 20 years.

"If resurgence in retail activity can stimulate further expansion and job-creation in Dudley, then the local community will be delighted," says Mr Handslip.