Floor Coverings

The floor coverings industry in the US includes about 700 manufacturers; 4,000 wholesalers; and 15,000 retailers; with combined annual end-user sales of $25 billion. Major manufacturers include Shaw Industries, Mohawk Industries, Beaulieu Group, and Armstrong World Industries. Large retail franchise chains include Flooring America and Carpet One. The industry is highly concentrated at the manufacturing end, where the four largest companies hold close to 75 percent of the market, and highly fragmented at the retail end, where the top 50 companies hold just 10 percent.

COMPETITIVE LANDSCAPE

Demand for floor coverings depends on residential and commercial real estate construction and home sales, which can be cyclical. With many costs fixed, profitability of individual companies depends on their volume of business. There are large economies of scale in manufacturing and distribution. Annual revenue per employee at large carpet mills is close to $300,000. A typical wholesale location has annual revenue of $50 million, a typical retail location about $4 million.

PRODUCTS, OPERATIONS & TECHNOLOGY

The industry produces and sells carpets and rugs, hardwood flooring, “resilient” plastic sheeting, and ceramic tiles. The majority (65 percent) of sales consists of carpeting and rugs. Tufted nylon carpeting accounts for about 50 percent of industry sales; rugs and other carpets, 15 percent; plastic sheeting and tiles, 23 percent; and wood flooring, 12 percent. Most carpeting is made on large tufting machines that use rows of needles to sew loops of nylon thread into ...