Appliance Science

Kitchen-maker Miele weighs quality and cost

Miele wächst kräftig mit Staubsaugern und Einbaugeräten
Peering into the future, which is grey and expensive. Source: DPA

Miele’s two-pronged strategy plays on one hand to the high end, and on the other to a younger, less affluent market.

It wants to be all things to all people. But although Miele is known for its high-quality engineering, this strategy may be too little, too late and too costly.

A glance at its new fine-dining delivery service sums up this approach, along with a hiccup.

Together with a startup, Miele brings private diners three-course meals on porcelain plates, kept warm in a styrofoam box. So far, so delicious, except that the food has to be reheated in the company’s “dialog oven,” a form of futuristic microwave which costs €8,000 ($9,333).

The oven is not the only expensive item. Take washing machines, for example. Miele wants to market its goods to regular buyers but its cheapest model at €749 is much more expensive than those of Samsung and LG at around €369. Both Korean companies produce many more models and can sell their goods more cheaply, profiting from the scale of their operations.

Miele responds by emphasizing its innovative products. A spokesman told Handelsblatt that the company always tells customers that it isn’t trying to compete on price, though behind the scenes, Miele is having more of its goods produced in low-wage countries.

Miele garer 1800×1200
Is that done yet? Source: DPA

Miele is also looking to Asia, and other markets, as it plans further growth. European buyers are currently less keen to buy beyond the minimum. In Asia countries, the company fits out new apartments with high-end bathrooms and kitchens. That will show potential buyers that they’re looking at high-quality real estate, said Miele’s sales boss Axel Kniehl. “They wouldn’t figure that out by glancing at the pipes.”

Miele is also fighting to innovate as much as bigger rivals, which have more cash to spend. But though Mr. Kniehl said his engineers could match the best in the business, sometimes, they haven’t moved fast enough. The firm’s bagless vacuum cleaners came to market three decades after British company Dyson’s and its tumble driers were also slow to appear. Miele retorts that rivals bring products to market so fast that they sometimes disappoint.

However, the company draws solace and cash from other professional products it makes. In 2017, Miele bought Steelco, an Italian maker of medical technology. The company’s cleaning and disinfection equipment for clinics and labs now make up an important part of its revenue.

And Miele continues to invest in startups, beyond supplying fine meals to executives and private diners. But is it doing enough to capture both ends of the market? Time will tell if Miele can have its cake and eat it, too.

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Christoph Kapalschinski covers the retail sector for Handelsblatt. To contact the author: kapalschinski@handelsblatt.com

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