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Lauder’s Freda: Services, Creativity and Quality Remain Paramount

Fabrizio Freda, ceo of the Estée Lauder Cos. Inc., advised beauty executives how to lead through change at the WWD Beauty Summit.

Leading change starts with understanding what stays the same, according to Fabrizio Freda, chief executive officer of the Estée Lauder Cos. Inc.

“No matter how fluid this environment, the art of leading through change starts by understanding what has not changed,” Freda said at the WWD Beauty Summit. Having a quality product is paramount, and creativity is the differentiator.

The fast-changing retail environment is shifting in favor of beauty companies, according to Freda, who characterized the climate as one where consumers are more beauty-hungry than ever. What’s more, demographic shifts are expected to continue to fan an increased spend in the category.

“Novelty is great, but loyalty is gold,” Freda said. “To build meaningful market share in our sector you need to win the repurchase game….The secret to sustainable growth is moving people from trial to replenishment and this is not changing,” he added. “Trial is investment, repurchase is profitable.”

To get to that repurchase point, companies need high-quality products, Freda said.

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“My advice to legacy and pioneer brands alike [is to] remember quality product and performance matter,” Freda said.

Services are also key.

“When it comes to prestige beauty, the customized service model…is still a key driver of growth. Knowing how to use a product and what you can do with it remains a performance driver. At the Estée Lauder Cos., we call these high-touch services,” Freda said. But meeting the customer online presents a different opportunity, he noted.

Companies need to be thinking long term, according to Freda, especially because the industry volatility and pace of change aren’t going away any time soon. Lauder for example, has developed a 10-year strategic compass meant to anticipate future trends. That strategy is behind Lauder’s moves, like building up artisanal and luxury fragrances, Freda said. The business has acquired niche and luxury fragrance brands By Kilian, Le Labo, Rodin Olio Lusso and Editions de Parfums de Frédéric Malle in recent years. Lauder has also been building up in makeup with the purchases of Too Faced and Becca, which is educating the larger company.

“Our goal is not to turn them into us, our goal is to help them be the best they can be and to learn from that,” Freda said.

Diversification also helps with tumultuous times. “You don’t have to be a multibrand company like ours to think in terms of multiple engines of growth,” he said. “Different hero products can fuel your brand.” Playing in a variety of geographies can also add diversification, Freda added.