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Cardon Carpet

In: Business and Management

Submitted By baobao
Words 2146
Pages 9
Annual sales for floorcoverings in the US is about $50 billion, of which carpet and rugs accounted for about 70% of total market share. Rug and carpet retail sales in 1999 were about $17.9 billion, about 7% increase from 1998. Sales from 1994 to 1998 increased from $13.5 to $15.4 billion, so sales increase only averaged about 3% per year. Thus, the trend shows that industry sales growth has been stagnant or fairly slow. The two main segments of the rug and carpet industry are residential and contract, with 74% and 26% of sales respectively, so the residential segment is definitely the main target market for all the firms in the industry.
Even though carpet and rugs is still the leader in the floorcoverings market with close to 70% of the market share, it has declined significantly from the 82% in 1985. At the same time, other alternatives such as hardwood, ceramic tile, and laminate all showed gains in their market share. Also, export sales declined by 6% from 1970 to 1999. Therefore, the size of the overall carpet and rug industry has been shrinking due to competition from other floorcovering options and increased competition in the overseas markets.
One reason that could have caused the overall market decline for carpet and rugs is the lack of marketing. Most consumers are not aware of the product improvements or can differentiate among the product offerings when the industry only spent about 2% of sales in consumer advertising. As a result, manufacturers competed based on price with most of their attention focused on reducing cost and achieving economies of scale. These efforts generated higher dollar sales, but profit margins remained dismal.
The carpet and rug industry went through a period of consolidation that reduced number of manufacturers from more than 300 to about 100, mainly via mergers, acquisitions, and bankruptcies. Majority of companies...

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