What Indians Want: Luxury Home Appliances
Image via Allegria
For Markus Miele, the growing number of Audis and BMWs on Indian roads is a clear sign that super-premium washing machines, microwave ovens and coffee machines have big growth potential in the country.
The managing director and co-proprietor of German luxury home appliances maker Miele, a company his great grandfather Carl Miele founded back in 1899, says its three-year-old Indian unit has found takers for refrigerators worth Rs 20 lakh in small towns such as Bilaspur and Hospet.
The 3 billion Euro firm operating in 47 countries is growing in "triple digits" in India, although on a small base, says Dr Miele.
You are one of the last global appliances companies to enter India. Do you think you should have entered the country earlier?
I do not think so. We were closely monitoring the market in your country for several years before we decided to take the plunge (in '09). My first visit to India was much before we began our subsidiary operations.
I thought consumers who can buy German luxury cars would also want to buy luxury appliances. One important precondition was that strong European kitchen brands were adequately represented as their stores are important distribution channels for our appliances. Another factor is our project business, which involves kitting out luxury real estate projects with our appliances.
This is true for our lifestyle products too, as the concept of modern kitchens is catching up fast. Besides, we wanted not just performance and quality but also a good service set up. In India, all our service engineers are graduates.
We have trained our people not just on the technical side but also how they should behave. It's about little things we want to take care of...like not leaving water on carpets, for example. You can turn an angry customer into a loyal brand ambassador.
What's been your biggest challenge in cracking the Indian market?
It's the geography. India is almost 10 times bigger than Germany and has 15 times its population. In absolute terms, there are more potential Miele customers in India than in most countries worldwide.
Their share of the total population though is only around 0.01 per cent. Unlike Australia and Europe, China and India are different - we have to learn a lot there. India is still largely underpenetrated in durables and appliances.
The first few years are always difficult in any new market; some products don't work well, others surprise us. We need to tell people what Miele stands for in a new market (and) have to create ambitious brand values.
How much has global slowdown impacted your growth plans?
As we grow only organically and are self-financed, fluctuating economic cycle are less noticeable at Miele than at other companies funded by third parties. We are actually experiencing good growth in many of our core markets in Europe and Asia. Our US business, which suffered for many years because of the real estate and financial crisis, has started to take off again. Emerging markets are growing faster than our established markets.
Most appliances firms, even if they are premium, operate in mass-priced segment in India. Does Miele plan to do the same?
No, that would go against our philosophy and, in the long run, damage our brand's reputation. Our positioning will remain consistent in the luxury segment. We pursue a standard pricing policy worldwide. Price differences, if any, are based on costing calculations performed by our subsidiaries, and in discrepancies regarding dealer margins and taxes. Also, we keep teaming up with luxury brands for promotions and events.
Are you planning any acquisitions in India?
No. Our strategy is geared to organic and sustainably profitable growth. The few acquisitions in the past were mainly to secure our production capacity or strategically adding products to our portfolio. It has never been a case of buying market share nor will it ever be.
As told to Ratna Bhushan of The Economic Times.
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