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Luxury Off-Pricer MadaLuxe Vault Eyes New Locations For Retail Growth

Luxury goods distributor MadaLuxe Group has a goal for 2020 to expand its off-price retail boutique presence. And incoming recession or not, the off-price channel may be a sure bet.

“We have three physical stores, and currently [we are] the only off-price, luxury only, multi-brand format in a boutique setting,” CEO Adam Freede, said by way of distinguishing MadaLuxe from other luxury off-pricers, like Nordstrom Rack, Saks Off Fifth and Century 21.

The luxury distributor’s three off-price locations are called MadaLuxe Vault, with each selling goods from between 15 to 20 brands. The first store opened in 2017 at the Citadel Outlets in Los Angeles, with two following in 2018, one at the Oceanside Outlets at San Clemente, also in California, and the other at the Outlets at Anthem, in Arizona. The stores average around 3,500 square feet.

“We’re diligently looking for other opportunities and other formats. Maybe we won’t be in all categories,” Freede said. “If [the store] is a smaller footprint, maybe we do just one category. We’re being prudent on our brick-and-mortar strategy right now.”

Freede co-founded the company in 2010 along with his mother Sandy Sholl. The original focus was partnerships with European luxury brands to help them distribute excess inventory into North America. But that shifted when the company entered the off-price arena with its Vault stores and e-commerce site.

MadaLuxe Vault is the direct-to-consumer arm of MadaLuxe Group, which itself operates different divisions, one of which includes its role as the exclusive North American distributor of full-price timepieces from Ferragamo, Versace and Versus Versace. The company’s investment arm partnered with Hilco Global and others to acquire the Haute Hippie label in 2015. In the last few years, the company has also ramped up its international business, while wholesale remains a major business division for the family-owned operation.

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Now MadaLuxe is looking to grow its physical store count to complement its e-commerce business.

“Luxury does best in every market of the world, and not every economy is [down] at the same time,” the Freede said.

Four years ago the international component of MadaLuxe Group accounted for just 8 percent of the business, and in 2019 it was in the ballpark of 30 percent, according to Freede. Overseas distribution now includes the Middle East, Japan, Latin America and the Caribbean.

MadaLuxe’s aim is to grow distribution strategically by “picking best-in-class retail partners,” the CEO said. That focus is part of its aim at closely guarding the integrity and authenticity of its luxury brand partners.

The company was recently named the distributor for Fendi Timepieces in North America. That exclusive distributorship allows another component of the MadaLuxe Group’s business to work on selling the line to other luxury fashion boutiques and high-end department stores, like Saks Fifth Avenue and Neiman Marcus.

Being picky about who it partners with is also one way to make sure brand distribution of its luxury business does well in both up and down markets.

“The recession possibility is certainly real. It’s going to come–just a matter of when,” Freede said.

The CEO believes, however, that off-price luxury is somewhat insulated from market fluctuations.

“We deliver special product that’s high quality and true to the brand’s DNA. Because it’s what the customer is looking for, that gives us [some] insulation…We’re not looking to grow our business at any forced rate and clip. We are going to do what’s best for the distribution of our brands,” he said, adding that the strategy also includes expansion of its company-owned retail stores when it comes to where it opens stores and at what pace.