A company that gets customers to buy its ultra-premium appliances by ‘invitation only’ has set base in India.
Would you buy a gas stove for Rs 2 lakh? How about a coffee maker for Rs 9 lakh? Or a refrigerator for Rs 8 lakh?
If you think the Indian consumer hasn’t moved up the value chain far enough to consider such price points, think again. Or better yet, ask Miele, the company that sells the world’s most expensive domestic appliances to such customers as Steve Jobs, Sandra Bullock, the Kremlin and the All England Lawn Tennis Association in Wimbledon.
Miele doesn’t arrange finance or offer consumer loans, yet the German family-headquartered company, which set base in India just four months ago, has already taken an order from one of India’s most prominent industrial tycoons and another from a leading real estate king.
It also recently lost a prospective client in a leading Bollywood actor because her Rs 5 lakh budget to do up her kitchen was too inadequate to accommodate their appliances.
It’s that kind of company, you understand.
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There are no retail showrooms but a Miele Experience Centre in Gurgaon that customers visit by invitation only and choose their products over a gourmet meal prepared on Miele appliances. Two such centres are coming up in Mumbai and Ahmedabad.
Miele’s India entry was preceded by a six-year study of the Indian market. Although there is no specific research on this market, Miele reckons there are buyers for its products since rich Indians don’t seem to balk at buying watches, scarves and other accessories for astronomical amounts.
“We are entering uncharted area in India,” says Dhananjay Chaturvedi, managing director of Miele India, who joined the company after a long stint with LG.
Miele is not just counting on ultra-rich Indians, it’s banking on Indians who are returning to the country after stints abroad with exposure to Miele products and cash to buy them.
Chaturvedi declined to disclose specific sales figures saying it was too early, but Miele is clearly not focused on a high-volume business model. “If we get one client buying our product in a day, we are through,” he says.
What makes a Miele appliance command such a high price tag? Chaturvedi says all the machines are made to last for 20 years, which actually makes the cost of ownership quite attractive.
“You might be paying Rs 20,000 for a washing machines that will last four years, which is the same as investing Rs 1 lakh in a Miele machine that will effectively cost you Rs 5,000 a year,” he points out.
What about obsolescence? For that Miele provides it customers free software upgrades. “The innovation in these machines is mostly in the software; there is very little innovation in the hardware. After all, remember a fan is a fan,” Chaturvedi explains.
Miele also claims that its products are uniquely engineered. For instance, the washing machine is run at 95 degree centigrade continuously for 10,000 hours, which is equivalent to five washes a week for 20 years before it is given the “quality approved” stamp. The switches are switched on and off 50,000 times to ensure that they work in extreme stress and the vacuum cleaner heads are tested over 600 miles of different floor surfaces.
Chaturvedi is aware that selling these machines is not the same as selling a Rolex or a BMW. That is simply because these products, unlike a washing machine or an oven, have show-off potential.
“We are aware that it is not enough to have money; the guy who will buy our machines would also be someone who understands this lifestyle and frequently invites people home,” he says.
Chaturvedi admits that Miele is still learning the ropes of distributing such expensive products. Its uber-exclusivity hasn’t prevented it from tying up with high-end stores like Reliance Digital in Gurgaon to display its products. It is in talks with Tata’s Croma for a similar deal.
The German company is also examining the possibility of tying up with realtors to fit their ultra-premium apartments with Miele appliances.
Chaturvedi and his team are also pushing their products by inviting interior designers and architects, who tend to be key advisors to customers on home appliances.
Miele does have competition in Gaggenau (from the Bosch-Siemens stable) and the US brand Sub Zero which are available in India only through imports. Miele also imports the machines, which are only built in Germany, but markets and services them in India through its own company.
And in any case, competition is the least of Miele’s challenges. It’s creating a profitable niche market that’s the bigger issue right now.
