Cardon Carpet Mills Case Study Analysis

CARDON CARPET MILLS CASE ANALYS

1. How would you characterize the carpet and rug industry and Cardon Carpet Mill’s position in the industry?

The carpet and rug industry is a $11.69 billion dollar industry. It is divided into two main segments, commercial sales involving institutions and businesses as well as residential sales. Since 1984, the carpet and rug industry has seen a steady decline in sales due in part to an influx of alternative floor covering choices. Such surfaces as hardwood, ceramic tile, and laminate have become increasingly popular over the years creating a more competitive flooring market. There is also a potential problem with the marketing strategy of carpet and rugs specifically noted in the residential carpet replacement area. Over the past decade, sales increased significantly with an increasing marketing emphasis on price reduction, however profitability for the industry saw negligible difference.

Over the last few decades carpet distribution has undergone 3 major changes. A move to direct distribution came about in the late 80’s. In the early 90’s independent retail outlets were losing out against the likes of the big box stores coming onto the scene. This action spawned the beginning of “buying groups” which enabled small retailers to buy together to get quantity pricing. In the late 90’s Shaw changed the marketplace by establishing its own chain of retail stores to sell its floor coverings directly to the public. This brought about massive backlash from the wholesalers and box stores and ultimately Shaw retreated from that strategy. Carpet and rug companies have been consolidating over the past decades as well. Companies have been bought out or merged with other companies or gone bankrupt. As these mergers and acquisitions have occurred, a few companies have stepped up to dominate the floor covering market.

Shaw industries is the market leader with over $4,108,000 in annual sales in 1999. Cardon Carpet is a much...