Proving its long-term commitment to dealers, premium appliance brand Miele recently opened an interactive gallery in the heart of London. Rebecca Nottingham went to meet company owners Dr Reinhard Zinkann and Dr Markus Miele and UK managing director Simon Grantham...
As brand heritage goes, Miele has one of the strongest around. The company is now in its 111th year and has a presence in 45 countries, having expanded into three new markets last year, including India. It reported sales of €2.7 billion (£2.35bn) for the business year 2008/9 with 73% of its annual turnover achieved outside of Germany.
But the nostalgia doesn't end there. The company is still owned and operated by the same two families that founded the brand back in 1899. And in today's troubled market, that's no mean feat.
Dr Reinhard Zinkann and Dr Markus Miele are both fourth-generation owners and their working partnership mirrors one their great-grandfathers struck up 110 years ago.
The company has made significant investment even during the downturn, spending €189 million (£164.8m) in 2008/9. The latest investment comes in the form of a new, state-of-the-art, interactive gallery showroom in the heart of London, where customers can 'try before they buy'. This provides dealers with an extension to their own studio and shows Miele's commitment to its core customer base.
Q Miele already has an Experience Centre in Abingdon, Oxfordshire, why open the Gallery in London?
Dr Zinkann: We already have the Experience Centre in Oxford, which has been hugely successful for us. Our decision to open this gallery in London is to make our brand more accessible. This gallery, like the Experience Centre in Abingdon, allows our customers to touch, feel and use the products so that they can fully understand the brand.
Q So who is this gallery for and what can they expect to gain from it?
Dr Miele: The gallery is open for any visitor at any time. We welcome people who already own Miele products and those who don't have one yet, but who are contemplating buying one. Ultimately, it is a sales tool for our dealers, an extension of their existing showroom. We also welcome architects, specifiers and designers - everyone is welcome. The important thing to point out is that we do not sell products from here to the public, instead this is an extension of our retailers' showroom. We understand that our retailers have limited space within their studio and not all of them will be a dedicated Miele retailer, so this gives them the opportunity to sell products that they may not be able to display.
Simon Grantham: These galleries aren't just showrooms to walk around. People can book themselves on cookery courses and attend events that give them the chance to 'try before they buy' and we are building up the number of events we host, so that we get the right amount of customer interaction.
Q Obviously financial problems are being felt around the world. How's business for Miele in the UK?
SG: In terms of the UK, most businesses have found it quite difficult over the past 12 months. In the past few weeks, we've really seen a positive upturn, and despite difficult times, what we know works really well is when we demonstrate our products to customers. An example of that is that the number of visitors to our Abingdon centre in the past 12 months has been 40% greater than before. So, that formula of customers coming to us before they buy has worked extremely well. I think galleries like this will continue to work very well for us.
Q Being a global brand, how is business in the other markets?
Dr M: We're not up on last year's figures, but neither are we down. In the last financial year, our turnover was 1.3% down on the year before and it has stayed in that region.
Dr Z: We have 46 own-sale subsidiaries in 45 countries, India being the most recent. Plus we have another 40 importer markets, which means we have distributors in these markets but we don't operate there ourselves.This means that we have a presence in 85 countries in the world and naturally some do better, some do worse, some are more affected by the downturn and some are less affected. As such, overall we are quite stable.
Q So, Miele has been performing well in the UK by comparison with other markets?
SG: In the UK, because it's so heavily reliant on property, the built-in market has been quite difficult this year, particularly for kitchen specialists. We benchmark ourselves against the market and we've outperformed the market, so we're obviously quite comfortable with that position.
Q Miele has invested and publicised the brand heavily during the downturn, do you think this is what will make the difference between businesses when we start seeing an upturn in the economy?
SG: What we have realised is that while things are difficult, there will be an upturn and when that happens you want to be at the top of your game. That is why we've invested in the gallery here in London - you can never be too prepared. We feel that we will be in good shape, particularly in London, when the upturn happens.
Dr Z: If you downscale your marketing activity in difficult times, naturally if the market then goes up again you will have difficulty recovering. So throughout the downturn, we have kept all our activities more or less stable and I think that will pay off.In difficult times, people tend to think more about their investments.So, if they do have to replace any appliances, during that time, they tend to go for a higher-priced or higher-value product rather than one that costs less because they know that it will last for 20 or more years. It gives them peace of mind, and in difficult financial times that is very important.
Q More than 100 years after it was founded, the Miele brand remains a family company. Do you think that this has helped cement the brand globally and make Miele stronger?
Dr M: I think it helps immensely. Because our brand has been around for 110 years, we're very well established and the fact that it remains within the founding families shows that we are committed and have a very long-term view.
Q As a premium brand, has Miele suffered from the failing development market?
SG: I think that the slowdown in the property development market over the past 18 months has had an effect on everyone. It has been very interesting over the past few months. It appears, particularly I've noticed recently in and around London, that there is suddenly more interest in developments and building projects. It's like the flame has been reignited.In terms of being specified, Miele is doing better than before in this sector because it seems thatdevelopers are quite keen to add value to the apartments they want to sell.We're quite keen to work with developers and specifiers going forward.
Dr M: There are just two rooms in a property that add value and that's the kitchen and bathroom. If you have Miele in the kitchen, people know that the apartment itself is of a similar quality and that isextremely important to a developer.
Q Miele is a high-end brand, have you ever been tempted to diversify into lower end markets?
Dr M: There is a very easy answer to that question and that is simply, no.
Dr Z: We don't know these markets and that is why we would never try to break into them. We're successful because we concentrate on the philosophy that better is always best and anything else is a compromise. That's probably one of the reasons we have survived throughout the past century. As such, our heritage is our future.
Dr M: We have everything we need to manufacture premium appliances, ranging from our marketing activities to the factory itself.
Q What does Miele offer the independent kitchenspecialist and its end consumers?
SG: Because we're a premium product, there's a chance for the retailer to add significant value to the sale of a kitchen. We also do a lot of training with retail staff so they know everything there is to know about our products. We offer formal training courses at our centre in Abingdon and will be offering them here at the London gallery, too. Then we back up the training with really good marketing material,everything from quality, detailed brochures and cooking events and ongoing business dialogue to ensure they are getting the most out of Miele products.We have more than 1,000 retailers throughout the UK, split between independent kitchen specialists and what we call traditional electrical retailers.
Q What are your plans for development in that area?
SG: Our plans are very much to focus all our efforts on those retailers that can sell the added value for which Miele stands. Increasingly, we want to work closely with the very big dealers to do that. We have implemented a new distribution policy to reward dealers and to encourage more of them to work closely with us. The introduction of this gallery is a part of our strategy to work closely with our dealers to help them promote Miele. This gallery is really added value to every Miele dealer in the UK. We fully understand that in their showrooms, space is limited, but here we have over 60 products on display, and most of them are in working order.
Q What are your plans for Miele in the UK over the next 12 months?
SG: It's a very busy and interesting time for Miele in the UK. The opening of this gallery marks the start of what we believe will be a very exciting year. Apart from the new gallery in London, we've already bought land in Manchester anticipating the opening of a 2,000 square metre two-floor Experience Centre to serve all of our dealers in the surrounding areas, giving them the same tools as dealers in the South.We're also launching quite a number of exciting products this year, but it's a bit early to say exactly what they are. We're launching something new in pretty much every large category we've got. These launches will strengthen our presence in the market and also add value to what we can offer retailers and ultimately the end consumer.
