(Yicai) Dec. 11 -- As China’s middle class tightens their wallets, major luxury brands are adjusting their China strategy to concentrate on high-end shopping malls located in the core business districts of big, first-tier cities, hoping to win over customers through premium services and better in-store experiences.

Due to sluggish sales, many luxury brands have abandoned their earlier push into smaller, lower-tier Chinese cities and have closed a number of outlets. However, this does not mean that they are retreating from the China market.

The stores being closed are mainly poorly performing ones, Zhong Fangfang, head of the commercial and retail services department at UK real estate firm Savills’ China arm, told Yicai. The aim is to concentrate resources in key areas. In fact, brands are actually expanding their presence in first-tier cities and metropolises with strong growth potential, while redirecting resources toward their target customer groups.

For example, Louis Vuitton recently opened a landmark building called "Louis, The Boat" at Shanghai’s HKRI Taikoo Hui and launched its first beauty boutique in the Nanjing Deji Plaza. Prada returned to Shanghai Plaza 66 this year, while Gucci and Balenciaga entered Guangzhou K11. And Chanel, which has not added any new stores, opened its sixth and seventh global exclusive service ateliers in Beijing and Shanghai.

When spending power was stronger, shoppers were willing to visit stores scattered across different malls to find the product they liked, said Zhong, who has in the past renovated and leased several shopping malls. But with today’s weaker market, there are fewer such determined buyers, and brands can no longer rely on them for strong sales. This has led to a shift of strategy among luxury brands which are now choosing to cluster their stores more closely with their peers and to focus on malls that have a strong appeal to their target consumers.

In addition to high-end malls, major airports in first-tier cities have also become prime locations for new luxury stores. In April, Louis Vuitton began trial operations at Shenzhen Bao'an International Airport with Hermès and Dior following soon after. Paris-based Hermès also opened its second outlet in Guangzhou at Baiyun Airport.

"The affluent elite are often too busy to shop in malls," said Zhi Dongliang, senior director and head of South China commercial and retail services at London-based Savills. Airport stores give this group of customers a convenient opportunity to make purchases.

Editors: Tang Shihua, Kim Taylor