Dr Markus Miele is the joint head of one of the most iconic brands in the premium kitchen sector, but even his rock-solid company has been shaken by the double-whammy of unprecedented high demand and logistical nightmares. The past two years have been, he says, a ‘rollercoaster’. Rebecca Nottingham went to meet him…
The Miele Experience Centre in Edinburgh opened at the end of 2021 and it is, as always, a handsome encapsulation of the premium brand’s values and intent. Miele is a family company (technically two families, Miele and Zinkann) and has built the brand on a platform of quality, usability and reliability.
This, naturally, makes it a favourite among premium kitchen retailers and the Experience Centres – three in the UK with Edinburgh as the 100th globally – are there to act as a hub to support its dealers who want customers to see, feel and, yes, practically experience more than they may be able to display in their showrooms.
But even Miele, which usually happily confirms all clichés about German efficiency, has not been immune to the logistical storms caused by the wildly high demand and the even wilder supply chain unpredictability triggered by the lockdowns.
For Dr Markus Miele, great-grandson of company co-founder Carl Miele, the past two years have been a difficult balance of managing the day-to-day upheaval and keeping the long-term plan on the road. This dual management is perfectly illustrated by the fact that kbbreview went to meet him at the opening of a new Experience Centre to also discuss the status of its current supply chain…
Q: The new Miele Experience Centre in Edinburgh is very impressive but why now?
A: For us, Experience Centres are an evolutionary concept. Every time we open a new one, we learn a lot and we tweak, twist, and improve things. Now the Edinburgh Experience Centre is the latest one, making it 100 worldwide, and things have changed again, products have changed, and how we explain them has changed. So you see all the good things here that we have learnt from all over the world. Being in Edinburgh is very special for me personally because it’s the first time in two years that I’ve been anywhere to open anything! It’s great to be able to talk in person again, because meeting dealers is always very interesting, as you learn things, you hear new ideas, and you get feedback on what you do well and what can be improved. That’s always very, very valuable.
Q: It’s been a unique couple of years for everybody in the kitchen sector, can you summarise how business is globally for Miele at the moment?
A: There’s no question 2020 was a rollercoaster year, we had a great start and then March and April were the worst months I can ever recall. That was really a catastrophe, but we picked up extremely well and the second half of the year was a record one. Everyone was working from home and wanted to invest in dishwashers, laundry and cooking appliances and this trend continued into 2021.That has put us in a situation where we have high demand that can’t be matched all the time. So, after being completely depressed in March and April 2020, we became very enthusiastic and now we have some supply issues. It’s still a rollercoaster!
Q: What is the current status for Miele in fulfilling orders?
A: There are a lot of restrictions right now when it comes to [shipping] containers and the availability of certain materials, but the worst thing is semiconductors. We need them for our electronic controls, and even though we produce and design our own circuit boards, we still need the chips to make the machines work. This is really a severe situation – you can get a call on Wednesday telling you that next week’s delivery will be only one-tenth of what you were expecting or even less. So this is really difficult. We’re trying to manage demand by supplying all our sales subsidiaries in the same manner, but there are some things that are not available for 10 to 12 weeks, and there are other products that we can deliver [as normal].
Day-to-day it’s about optimising what is there and I must praise our production planners, because every morning they have to see what material is there and what we can produce. It’s a really difficult situation and it’s also quite difficult to say when this might finish. None of the global supply chains are working perfectly but hopefully in 2022 we will see an end to this situation.
Q: Effective communication of these problems to your dealers must be such a learning process for you?
A: We have invested much more into our IT systems since this issue has emerged. Not just the central systems, but also across [our territories]. This gives us, for example, a much better understanding of the availability of products. This means we can have a much larger horizon and see the availability. I know a dealer is not paid if they don’t deliver the full project so we try to come up with alternative products and we have found many creative ways of helping them, but we can’t solve every problem. I even had a German friend call me asking if I could get a dishwasher for him. I called the German subsidiary and they said ‘even for you we don’t have any’. They didn’t have a single one left! I’ve never seen that situation before in my business life.
Q: What lessons have you learnt as a business and as a leader?
A: You look at your business and all its suppliers and see where you can get a second source. We know much better now who the sub-suppliers are of our sub-suppliers. We really ventured out into all of our value streams to look at where we have potential risks, and we are now evaluating a strategy on how to avoid them. In some cases, it is financially feasible to have a second source of supply and in others it’s very difficult. We also must look at, for example, how much supply do we order. Is it three days? Five days? Ten days? For semiconductors, we have just said ‘whatever they have just buy them’.
So the view on the business has changed, but the interesting thing is that although we have the operational efforts that are keeping us working 24/7, we are still investing in new product lines. The development team is working on the next generation, and this is very important. Although we have these difficulties right now, I am always there to say, ‘look ahead, what will be there in one, three, five or 10 years?’ We have to come up with great product ideas and I think we have some very good ideas in the drawer right now.
Q: Is this new Experience Centre part of ongoing growth plans in the UK?
A: Absolutely. When we open an Experience Centre it’s not only about the sales from that location. People are attracted to the Miele brand, and we have a lot of visitors who have been sent by their own local dealer and that’s great of course, we just want to show people what’s possible. In a lot of countries, we’ve seen that once we’ve opened the Experience Centre, every Miele dealer in the region sees an uplift too.
A question we’re asked a lot is ‘will it take away business from local dealers’ and we’ve seen time and again that the cake gets bigger and bigger for everyone because people get to know the Miele brand much more.
Q: What are your plans for the brand moving forward globally and in the UK?
A: We are very aware that sustainability is a huge issue, and we have a big programme involving over 100 colleagues talking about that one question – how can we be more sustainable? Although we have long-lasting appliances – we test them to last 20 years – I still get letters about the kind of packaging we use, for example. So we knew we had to identify the main topics and be serious about it. We have set goals about sustainability and want to take it further.
The second topic is digitalisation. From product engineering, development, production, and sales, it is a key area. We opened Miele X in 2020 (a global digital platform where marketing, sales, analytics and IT teams work together) and we are focused on driving digital sales and want to produce more digital assets there because we know that it is a highly online market in terms of research.
Q: Do you think there’s a disconnect between the push for sustainability by manufacturers and the demand for them?
A: When you look at the younger generation, they’re at least asking more. Sometimes it’s easy to answer as, of course, we have eco programs, but the issue is how often people use them. We did some research on how people use our washing machines, and they only used the eco program 4% of the time. So how can we make them aware of the energy and water that they can save just with that? How can we educate people to use our appliances to live a more sustainable life?
Q: If there’s also a push for digitalisation, do you see less value in physical retail over time? How important are your dealer showrooms?
A: The one thing we know about our products is that experience is everything. The products need to be accessible online as that is where the research is done. But we know that the critical success factor is touch points and so our kitchen partners are as vital as they’ve ever been. For Miele, it’s not an either/or situation, given our market growth potential there is so much more to go for, so it’s a partnership with our retailers. They have a great connection with the customer because they know much more about what they want – they know the house, if they have pets, if they love cooking and entertaining. They know what appliances fit them perfectly. The better the connection, the better the sale and the happier they and the customer are. Those who have that connection will have a bright future.
Q: Do you see demand continuing in the same way? When is the bubble going to burst?
A: Right now, I can only see that the backlogs are still increasing, so we have a high demand and it’s all over the world. The interest in having great appliances in the kitchen will still be high, but there will be a levelling out. It’s too early to say when, though. I think it will be a good 2022, trends such as sustainability will give a boost to some kitchen appliances and consumers are enjoying cooking with the family more too. The kitchen was always the centre of life in the house, but it is even more so now.
Miele Experience Centre Edinburgh
Miele opened its third UK Experience Centre in Edinburgh in 2021. It is its 100th worldwide. The showroom is located in the St James Quarter, and the company also has Experience Centres in London and Abingdon.
The new centre is a dedicated hub for Scotland and the North as there are no Miele Experience Centres north of Oxford. The company’s own research said that this new showroom will pull in people from within a two-hour drive of Edinburgh.
John Pickering (pictured below), managing director at Miele GB, said: “We know that a new Miele appliance is a considered purchase and customers are far more likely to buy when they feel properly informed and educated on features, benefits and longevity. A new referral system will be in place to support our kitchen retail partners to provide their customers with experiential pre-purchase advice and support.”
The showroom has a range of appliances on display for customers to look at, whether they are in the market for a replacement product or a full new suite of appliances.
It will also host ‘Discovery Classes’ for new clients that will go into detail about the features and benefits of each individual Miele product. The classes will also include recipe demonstrations. Existing customers can also take part in ‘Masterclass’ events, where they can learn about how to get the most out of their appliances. The new showroom manager is Ewan Laing, who previously worked for Le Creuset. He will be supported in store by a team of eight sales consultants and home economists.