Increasing competition in China’s top tier cities has prompted Swedish retailer H&M to take to smaller centres.

H&M plans to open between 80 to 90 stores across China this year, most of them in lower tier cities. It already has stores in smaller cities including Daqing, Meishan, Baicheng, Weifang and Zhangjiajie.

“The whole country is definitely getting more competitive,” said H&M CEO Karl-Johan Persson.

“We’ve tested second-tier cities and third-tier cities in China and found the concept is working well,” he said.

According to Matthew Crabbe, head of Asia Pacific research for Mintel, H&M’s move reflects the strong competition in bigger cities and the recognition of the opportunities in smaller cities.

“More companies are coming in and the pie is getting sliced more thinly,” said Crabbe.