With eight Miele Centres in place and the rules of the new selective distribution strategy clearly spelled out, Miele is calling independent retailers to consider becoming Miele specialist dealers to build incremental business and differentiate themselves in the competitive marketplace. Anna Ryland reports.
Premium appliances manufacturer Miele has always relied heavily on the support of independent dealers and their excellent customer service to maintain and grow its business in Britain.
At the end of 2009, Miele changed the way it worked with its retail partners in Britain, introducing a selective distribution strategy which is built around the Partner Programme. “Our new distribution policy allows us to select our partners and reward them depending on the level of support they give Miele and the service they offer to our customers. It is intended to give Miele partners enhanced profitability from Miele products,” says Simon Grantham, chief executive of Miele.
Paul Tyler, Miele’s sales director adds: “The selective distribution strategy encouraged us to evaluate our dealer base; as a result we closed approximately 300 trading partnerships. However, the dealers who wished to be our primary trading partners went straight to the top of our dealer base.”
Mr Grantham, explains the three-tier structure of the Miele Partner Programme. “At the top there is the Miele Centre which has the widest range of products on display and working appliances. The partners running Miele Centres have similar displays to that of a Miele Gallery and offer their customers a similar experience – with their well trained staff. Then there is the Miele Specialist and below this – the Miele Partner. All our partners aim to give customers the best experience they can. We help them to achieve this by delivering training and demonstration programmes, and assisting them with visits to the Miele Gallery in London and the Abingdon Experience Centre. It works very well: the sales in Miele Centres are up by 15% on last year, on built-in it’s considerably more than that. The programme allows retailers to sell much higher value products because they are delivering the right customer experience in store.”
“We are now actively looking for partners of the Miele Centres’ quality to sell our products throughout the country. Currently we have eight Centres and we are going to open another three during the next 12 months. We also have plans for another Miele Experience Centre in Cheadle, near Manchester,” says Mr Tyler.
Miele Centres currently account for 8% of the manufacturer’s business.
Well aware that encouraging customers to use its premium cooking, laundry and cooling appliances is the best way of convincing them of their benefits, and longevity, Miele opened its first Experience Centre in Abingdon in 2005. In its showrooms, the products are fully connected so the visitors can cook on them, test the wash results on their garments or vacuum clean on a range of floor surfaces. More than 37,000 customers have been to Abingdon to test Miele promise of product excellence. Late last year saw the opening of the second Miele’s Gallery in London’s Cavendish Place. It has already recorded 2,500 customer ‘experiences’ since January 2010. Cookery demonstrations bring particularly impressive results since following them 20% of customers purchase between one and five appliances, while 60% of participants buy between six and nine of them.
The concept in practice
Steve Scogings is managing director of Stellisons, whose store in Chelmsford is a Miele Centre while his other seven stores are Specialists or Specialist Plus partners. He explains how the concept works in practice: “We carried a major refurbishment to our Chelmsford store in late 2008 and decided to devote the main part of the ground floor to Miele appliances. We have been approached by Miele to become a Miele Centre on the understanding that all the appliances on display had to be ‘live’. We knew that the Centre concept was not about the prices but about the experience we give customers. Our contribution was investment in store refurbishment while Miele financed displays and products.
“Since the reopening of the store we have regular demonstration days – open house day events (following new product launches) and evening demonstrations with Miele home economist cooking and specialist staff in attendance. The evening demonstrations are particularly effective in generating sales, as we also offer special deals for people who purchase within 30 days. The last event resulted in sales of £35,000. Since becoming a Miele Centre my whole business has grown by 14% and we acquired a reputation in the area as the place to come for customers who consider serious home investments. However if one of our customers is planning to spend £10-15K on new appliances and we don’t have our demonstration days for a while then we send them (at our expense) to the Miele London Gallery to experience the products, but they come back to us to buy them.”
Training is a key element of the programme. Mr Tyler says: “For all our partners we have training courses, separate for freestanding and built-in products; ranging from an introductory to executive level. The depth of training aimed at Centre and Specialist staff is greater than for general trade partners.”
Steve Scogings adds: “In the past, staff would learn more on the shop floor than on a training course. Now it’s the other way round because of the depth of the training. People coming to the Centre expect the best so the retailers cannot afford to be second-rate salesmen.”
Approximately 70% of Miele sales go through independents and kitchen specialists, so the company takes a firm stand on online trading.
Mr Tyler explains: “Selective distribution strategy stipulates that we will only be supplying internet dealers who have the same name as their bricks-and-mortar stores. We wish the consumers who buy online to be able to identify whom they are buying from. We closed down many sites used by our partners whose names didn’t correlate with their trading names.
“Yet, we accept that the internet is important and some consumers choose to research or shop online, and electrical retailers need to have a good online presence.”
Time to invest
Miele’s Mr Grantham believes that although the economic climate is still tough (yet improving) it is the right time for both manufacturers and retailers to take advantage of investment opportunities.
“The Partner Programme was launched in Germany three years ago. It was very successful there and we decided to implement it in Britain, where the structure of the retail market is similar. It will be rolled out to the rest of Europe during the next 12 months. Our market share in the UK is 5%, while in Germany it reached 20%. In Britain we have so much potential to grow, and with the Partner Programme we have demonstrated to our dealers how far we are prepared to support them and invest in them.”