Hong Kong luxury retailer THE SWANK plans to accelerate its expansion in the mainland's second- and third-tier cities, in order to cash in on the booming luxury market.

"In 2012, THE SWANK will open its first stores in Xi'an and Hangzhou," said Tony Lam, the retailer's general manager.

"And in the next five years, we will open at least five stores in the mainland."

THE SWANK, a luxury multi-brand fashion house, wholly owned by ENM Group, operates four boutiques in Hong Kong and one in Beijing, plus nine monobrand boutiques including Brioni, Brunello Cucinelli, Just Cavalli, Paule Ka, Roberto Cavalli and Sonia Rykiel.

China's luxury spending has been booming over the past years. According to Frost & Sullivan Inc, a US market consultancy, China's luxury consumption in 2010 reached nearly 220 billion yuan ($34.94 billion), having a compound annual growth of 26 percent from 2006.

Over the next three years, China is expected to overtake Japan to become the world's second-largest consumer of luxury goods. In 2015, China's luxury consumption is expected to reach 570 billion yuan.

Lam said sales at the company's Beijing store have grown at an annual rate of 25 percent since its opening in 2009, "and we expect the same growth for the future mainland stores".

Lane Crawford, another leading specialty store from Hong Kong, said earlier that sales at its Beijing store were better than expected, and it also planned several new stores in the mainland.

Second- and third-tier cities will become the main battleground for luxury labels in China, as first-tier cities can no longer satisfy the appetite of some luxury brands, said Frost & Sullivan.

The consultancy firm said that the number of Chinese people willing to spend money on luxury goods will grow over the next five years from 40 million to 160 million, mainly in second- and third-tier cities.

In 2010, the number of people in China with an annual disposable income of more than 100,000 yuan jumped to 21.7 million.

That figure is expected to increase to 54 million by 2015.

liwoke@chinadaily.com.cn