Why Australia is Miele’s biggest market outside Germany

Caitlin Fitzsimmons Online editor

Why Australia is Miele’s biggest market outside Germany and the retail sector has reason to be cheerful

Published 16 September 2013 11:32, Updated 16 September 2013 11:34

The joint head of German appliances brand Miele has a message for the Australian retail sector: times are pretty good, actually. Given that Australia is Miele’s second biggest market outside Germany, he should know. Dr Markus Miele and Dr Reinhard Zinkann, the great-grandson of the company founders, recently spent a week in Australia to launch the new range of Miele cooking appliances and met with retail partners including Harvey Norman and Winning Appliances.“In my view the retailers are not doing it as tough as some markets in Europe but there is clearly some lack of consumer confidence in their view,” says Dr Miele, who is one of five managing directors.

“Clearly those retailers who are innovating and really focusing on the consumer experience are doing better than those who are failing to change quickly enough. Premium products and premium retail experiences have clearly been less impacted than the commodity end of the market.”

Winning Appliances chief executive David Crane agrees, pointing out that despite the challenges in the retail sector, particularly for appliances, his business is growing 17 per cent year on year.

Winning Appliances, which is the bricks-and-mortar sister company to Appliances Online, has been investing in a strategy of “retail theatre” and has the largest Miele display in the southern hemispherein its Redfern showroom.

“We have a Miele working kitchen inside the flagship showroom where every month you’ll find a Miele home economist creating fantastic dishes in the Miele products, educating and exciting our customers into why they should buy Miele and buy Miele from Winning Appliances,” Crane says.

“I personally find the Australian consumer extremely savvy and more interested in quality than quantity – they’re prepared to save a little bit longer to buy something a little bit better and that’s where Miele fits in. The Miele space in Redfern is the highest volume cooking space in the world in regards to the volume we do out of a single store.”

Germany is Miele’s largest market, representing 30 per cent of sales volume, but Australia is the second biggest both in the cooking category and overall. The company sells about 200,000 products a year in Australia, which is a similar ratio of sales per head of population to Germany.

Australian retailers often cite the high dollar, the high cost of rent in Australian cities and the high local wages as reasons why they find it difficult to compete with overseas online retailers. But Miele manufactures in Germany, which is also a high-cost centre, and the company philosophy is that value is about quality not just price.

Miele products rate consistently well in reviews by consumer groups such as Choice and UK counterpart Which? and the price is controlled because the company uses a chartered agency model for large appliances such as dishwashers and washing machines. This means retailers are selling as Miele agents rather than on a traditional wholesale/retail model – and you’ll rarely find deep discounts on Miele appliances as retailers compete on service not price.

“Ultimately the end consumer will decide whether we offer value in the market place or not,” Dr Miele says.

Dr Miele says there are a few reasons why Miele has done well in Australia. Firstly, Australian consumers appreciate high quality and secondly, Miele Australia was the first subsidiary outside Europe 33 years ago. Finally, Australians’ penchant for DIY and home renovation is a key driver – for the past 20 years Miele has operated a successful projects business for property developers and home builders.

Miele says online retail will play an important role for Miele in the future, especially for bulky goods like washing machine. Miele has its own distribution infrastructure with next-day delivery facility and will be working to enable online transactions for retail partners in the coming months.