Luxury fashion distributor MadaLuxe Group has entered retail with a proposition that combines two sectors bucking much of the pain points in today’s shifting consumer landscape.
That is, open a multi-brand luxury, off-price boutique in one of the busiest outlet centers in the nation, making a splash at its first move into brick-and-mortar retail ahead of plans to continue expanding the concept next year.
“With luxury, if you really think about it, all of Europe is known for their multi-brand luxury boutiques. The U.S. is not,” said MadaLuxe Group chief executive officer and cofounder Sandy Sholl. “Jeffrey sold to Nordstrom a few years ago. There’s just very few so this country doesn’t have a lot of those to begin with in full-line and there’s never been a multi-brand, multi-category luxury off-price boutique experience.”
That’s a mouthful but, in short, MadaLuxe Vault’s 3,000-square-foot space at the Citadal Outlets brings an assortment from about 20 brands catering to women and men across apparel, accessories and footwear.
“The two sectors of the retail space that have been performing for a very long time and continue to do so are off-price and luxury,” said cofounder and president Adam Freede. “Putting the two of them together takes brands that the entire world knows. The two trends we’re trying to capitalize on are the need for those brands to be in a brick-and-mortar experience and to bring them to an outlet mall, like the Citadel, where you have a great amount of foot traffic and a captive audience.”
It’s a big move for the seven-year-old company, which has largely flown under the radar among consumers as the mother-son founding team built the business, working with major luxury brands. MadaLuxe Group, based out of Seal Beach, Calif., is comprised of multiple divisions ranging from distribution and back-of-office services for brands to serving as the exclusive U.S. distributor for full-price timepieces by Ferragamo, Versace and Versus Versace. There is also its investment arm, which went in with Hilco Global among other companies to acquire the Haute Hippie label in 2015. MadaLuxe Group, with a direct workforce of roughly 130, confirmed its retail sales have grown to more than $200 million, although the firm declined to disclose how much it is generating in revenue companywide.
Opening the MadaLuxe brand to consumers with a direct business, in the company’s eyes, is just another point of distribution to serve its customers.
“Everybody uses the word omni, but to us it’s not just online or stores,” Freede said. “For us it’s about having a distribution solution for any avenue around the world, whether it’s international, domestic, our own stores, our own e-commerce, having a product on Amazon or our wholesale distribution, which is the anchor of our business.”
The company also this year launched e-commerce for MadaLuxe Vault, which has an assortment different from what’s offered in the Citadel store. The e-commerce and store donate an undisclosed percentage of proceeds to the non-profit World of Children, where both Sholl and Freede sit on the board.
Looking ahead, next year could see as many as five MadaLuxe Vault locations opened. It will be a careful balancing act, Sholl said, stressing a concern that most entering retail grapple with: not cannibalizing business from retail or brand partners.
“We’re getting our first experience here so we’re learning a lot and we do have a strategic vision for which stores to open next. But the most important thing is we have key retail partners and we’re very protective and sensitive about our relationships as well as our brands’ integrity,” Sholl said. “So the locations are very strategically picked. For instance, this mall has no Saks Off 5th, no Neiman Last Call, no Nordstrom Rack.”
The Citadel, owned by Newport Beach real estate firm Craig Realty Group, totals 431,064 square feet with more than 145 tenants, including Coach, Nike, Kate Spade, Hugo Boss, Adidas, Calvin Klein and H&M. The center does about $1,450 in sales per square foot, with international visitors accounting for about 52 percent of foot traffic.
“Ultra luxury does well,” said Craig Realty founder and CEO Steven Craig.
“We have a lot of international tourists and they want those products and as opposed to us trying to identify each individual store that sells products like Versace, Gucci and others, they’re able to do it all in one,” Craig said of MadaLuxe. “It’s a great find for us because it provides the products people are buying and at great prices. It’s nice, too, because it’s not outlet goods. It’s first-run merchandise.”
The company is also keen to ensure that MadaLuxe Vault at brick-and-mortar will be a true boutique experience.
“There are other stores that carry luxury, but they’re not boutique environments,” said Darin Skinner, who was recently hired as senior vice president of stores after more than 20 years at Guess Inc. “This is more about the environment and service. If I have to staff up to maintain a level of service, we’ll do it.”