The recovering housing market will aid the industry despite increasing competition.
New York, NY (PRWEB) August 27, 2014
Sales hit the floor for operators in the Floor Covering Stores industry in the past five years. Professional contractors and homeowners typically purchase industry goods during new residential construction and home renovation projects. Therefore, declines in housing starts and remodeling activity following the housing market collapse caused demand to plummet. Since 2010, however, demand conditions have slowly improved in line with a gradually strengthening economy. In 2012, housing starts increased 28.2% and are anticipated to rise another 17.3% in 2014. Consequently, in the five years to 2014, the industry has begun to slowly recover, with revenue expected to increase at an annualized rate of 0.1% to $17.9 billion, with a 2.2% jump in 2014 alone.
In the past five years, competition from home improvement stores, such as The Home Depot and Lowe's, has held back the industry's growth. According to IBISWorld Industry Analyst Maksim Soshkin, “By leveraging their size, these national retailers have achieved significant cost savings on comparable products and passed them down to consumers in the form of lower prices.” Consequently, home improvement stores have been increasingly attracting customers away from industry retailers, pressuring industry revenue. As operators reduced their price markups to remain competitive, the industry's average profitability came under increased pressure. However, a gradual rise in demand over recent years has improved profitability. Nevertheless, the recession and high competition has caused many underperforming companies to exit the industry. The number of enterprises is expected to decline at an annualized rate of 1.7%, from 18,688 in 2009 to 17,145 in 2014.
As a result of the economic recovery, IBISWorld forecasts steady growth for the industry in the five years to 2019. While competition will persist, the upturn of the housing market will boost overall demand for floor coverings, thus benefiting the industry. Over the five-year period, consumer confidence and disposable income are forecast to rise, benefiting the industry. Consequently, revenue is projected to increase over the same period. “Moving forward, the industry will face higher material costs, which, when combined with rising competition, will force operators to consolidate to salvage profit margins,” says Soshkin.
For more information, visit IBISWorld’s Floor Covering Stores in the US industry report page.
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IBISWorld industry Report Key Topics
Establishments in the Floor Covering Stores industry retail carpets, rugs, tiles and vinyl flooring. Most operators manage sales and administrative activities, such as customer service, product merchandising, advertising, inventory control and cash handling. Some operators also offer installation or repair services.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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