COMMENT:Miele Love Their Chartered Agency System Because It Stops Discounting
Oh dear, some people really do get their nickers in a twist and when they do, they appear so so out of touch.
Patrick Avenell the Editor of Appliance Retailer seems to be upset over the story we wrote about JB Hi Fi and Miele earlier today.
The story came about because I asked a simple question at a press conference, “Is JB Hi Fi going to stock the new $2,199 Miele FashionMaster ironing system”.
Miele category manager Louise Paynter replied claiming that Miele products are “Not sold at JB Hi Fi”.
“When I pointed out that this was incorrect she corrected herself by admitting that Miele products were sold at the mass retailer, she then pointed out that it was only Miele budget products that were ranged.
There was no argument as Avenell pointed out nor was there any jumping to conclusions.
The bottom line is that by not making this product available at JB Hi Fi, Miele are missing out on a significant audience of consumers who are upwardly mobile have money and are people where price is not necessarily a barrier to buying a branded product.
While Appliance Retailer was banging on about ChannelNews and in particular myself and claims that I do not understanding the Miele Chartered Agency system we were breaking the story that Miele is about to undergo a massive restructure and that between 20 and 30 Miele staff were being laid off.
We also pointed out that Miele is set to put more staff into stores so that they can take better control of the sales process.
JB Hi Fi has some of the best AB customers walking through their door every day If you take the top end Hi Fi market you will find that consumers who spend upward of $50,000 to $200,000 on a Hi Fi system shop at JB Hi Fi for their content.
Scott Browning the Marketing Director of JB Hi Fi told me recently that demand for 24Bit CD content has increased significantly this year.
All you have to do is go to a suburb like Mosman and ask any residents whether they shop at JB Hi Fi and you will find that the answer is overwhelmingly yes, they go there to but $10,000 4K TV’s expensive notebooks and consumer electronics gear for their teenage children.
They are also going there to buy $4,000 LG and Samsung refrigerators and $3,500 Samsung washing machines that are now giving Miele a serious run for their money.
What Miele want which is the reason that they have relationships with the likes of Harvey Norman, JB Hi Fi and Bing Lee is access to those retailers’ customers.
Way before Patrick Avenell was scribbling away on Appliance retailer I was writing about the Miele Chartered Agency system which as Avenell tried to point out essentially sets up a concession within retail stores, such as Harvey Norman, Winning Appliances or E&S Trading, and allows Miele to control the sale of their goods right up to the price at which goods are sold.
You are not dealing with the retailer whose store you have walked into you are dealing with Miele which is why I suspect that Miele is restricting their operation so that can control even more of the sales process while getting access to the end customer via their own demonstration centres.
What Miele have in place is a sophisticated customer marketing program whereby they get access to a mass retailers customers who they then market directly to, I know because in the past I have purchased tens of thousands of dollars’ worth of Miele products.
The appliance market is changing and some pretty savvy brands are now starting to give Miele a run for their money and Miele products are good they are not necessarily the best.
Their steam ovens are average despite the big price ticket, the ovens are small compared to the Sharp steam oven which allows one to steam cook and automatically brown a large sized turkey, compared to the small Sharp water bottle the Miele water bottle takes up a lot of space reducing the oven size.
Another Miele product that is pretty average is there coffee machine and while it integrates nicely alongside an oven it does not deliver a good coffee experience.
One of the best products is the new Breville Oracle Coffee Machines.
The Company is also under threat in the dishwasher market with the new Samsung WaterWall dishwasher significantly superior to the Miele offering which does include a feature that eliminates the need for a handle, all you do is tap the top part of the dishwasher however it does not wash dishes better than what the Samsung model does.
What Miele is working on is taking control of their brand in an effort to keep the price up and the brand seen as a prestige appliance brand. German Companies are extremely good at this and you only have to look at what BMW, Audi and Mercedes do with their showrooms.
The thought of someone discounting a Miele product horrifies Miele executives which is why they have in place their Miele Chartered Agency system which stops retailers from discounting their products a move which the Australian Competition and Consumer Commission seems to be happy to go along with.
This system results in all retailers being forced to offer Miele products for the same price because they are not actually retailing the products.
So next time you walk into Bing Lee or Harvey Norman to buy a Miele product try asking for a discount, It will be intteresting to hear the response you get.