In many ways, German domestic appliance manufacturer Miele is a company that offers a glimpse into the past. Established in 1899, it is still run by the great grandchildren of the two men who began the company, it has stuck almost religiously to the principles it was founded upon, even as the wider marketplace continues to move in a different direction, and more than 90% of its production operations take place in Germany.
They are the archetype of a successful industrial age in Germany. Appliancesa are designed for durability and performances first and foremost, as Miele himself recently said in a BBC interview, “People like to change their mobile phones more often, or TV sets maybe, but not your washing machine or tumble dryer. It’s a replacement market we’re in”.
It seems to be working. The company is still reporting year-on-year sales growth across its range of domestic items, despite their products usually costing around twice as much as a standard mid-market equivalent. Instead, Miele thrives in the (apparently growing) segment of the market that desires longevity and durability. They build relationships and brand loyalty with their consumer base.
The impact of high-tech Internet of Things technology may disrupt the marketplace again and there are numerous examples of fellow Germans brands like Siemens and Bosch adding an increasing array of features to their appliances. Still, for now, Miele are evidence that there isn’t a single uniform approach to business success. Moreover, the Ellen MacArthur Foundation’s Towards the Circular Economy vol 1 report suggests that the economics of going one step further and leasing the service of durable domestic appliances, would bring even better economic returns. The report analyses washing machines as an example case, finding that customers could save on their overall costs, while manufacturers could increase profits by up to a third.
Source: Can you charge double and still keep your customers coming back?
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