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Case Study > Industry Background > Flashcards

Industry Background Flashcards

1
Q

What are UK carpets made from?

A

Wool, cotton and synthetic fibres

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2
Q

Give some examples of synthetic materials used to make carpets, and what they are?

A

Nylon
Polypropylene
They are high-volume plastic by-products of the petroleum industry

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3
Q

Are wool carpets more expensive than synthetic?

A

Yes, much more expensive

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4
Q

How much of the UK carpet market is made up of wool carpets

A

10% by value of the UK CARPET MARKET

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5
Q

How are most carpets manufactured?

A

On a large scale by lunching a threat (known as yarn) into a backing material - known as tufting

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6
Q

What is tufting?

A

How most carpets are made - done on a large scale by lunching a threat (known as yarn) into a backing material - known as tufting

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7
Q

How are tufted carpets manufactured?

A

In long wide rolls

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8
Q

How much carpet can a single commercial tufting machine produce in 1 day?

A

More to 10km of carpet roll a day

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9
Q

How many metres 2 of carpet can large commercial carpet manufacturers produce in a day?

A

millions of square metres

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10
Q

What else can tufted machines be used to produce other than carpets?

A

Other tufted products, such as artificial lawns

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11
Q

How flexible are the tufting machines between different types of product production?

A

In principle, a variety of tufted products could be made by the same manufacturer on the same day, subject to suitable reconfiguration of the machine

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12
Q

What is the standard carpet roll size? and why?

A

4m or 5m wide
This allows a large single piece to be fitted to a particular rooms’ dimensions (hence term fitted carpet)

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13
Q

How much waste is there usually from a piece of fitted carpet?

A

Often 5-20%

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14
Q

What has become the solution to the high amount of wastage for fitted carpets?

A

Carpets being sold as tiles (modular carpets)
Provides a more efficient and sustainable carpeting solution

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15
Q

Where is modular carpet most often used?

A

Commercial settings

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16
Q

What is an alternative carpet construction technique to tufting?

A

Needle-felt
Typically made from synthetic materials

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17
Q

What are the benefits of needle-felt carpets?

A

They are resistant to moisture and sun, so they are suitable for external applications

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18
Q

What are the other uses for needle-felt textiles?

A

Industrial filtration
Garment manufacture

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19
Q

What is the annual revenue for the UK carpet manufacturing sector?

A

Almost £1bn

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20
Q

How many carpet manufacturers are there in the UK?

A

Approx 100 - most of which are small to meidium unquoted businesses that focus of high quality carpets

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21
Q

Describe most UK carpet manufacturers

A

Mostly small to medium sized unquote businesses that focus on high quality carpets

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22
Q

Who is the largest UK carpet manufacturer?

A

AIM listed Victoria plc - international flooring conglomerate

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23
Q

Is there international competition in UK carpet manufacturing business?

A

Yes - mostly imported carpets from the EU which tend to be focused on lower -priced segments of UK market

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24
Q

What % of UK carpet manufactured is made for residential use?

A

almost 50%

25
Q

Give some examples of different places carpets are made for in the UK?

A

Commercial establishments such as offices, shops, hotels
More specialist sectors such as transport (coaches and cruise ships)

26
Q

What is the key difference between commercial and residential carpets? Give an example

A

Commercial carpets need to meet the specific requirements of the customer
E.g. areas which are frequently walked on (high-traffic areas) e.g. corridors, need to be hardwearing
Those regularly exposed to moisture and soiling (e.g. cafes) require carpet that is resistant to stains/dirt

27
Q

What are the level of repeat sales like in UK capret industry?

A

As carpets wear out there is a reasonably srrued level of repeat sales

28
Q

When does additional growth of carpet sales occur?

A

Comes from grohome buying activities, as there is a strong correlation between people moving into a new home and then replacing the carpet

29
Q

How long does it take usually for someone to replace the carpets in a property after purchase?

A

12-18months after purchasing

30
Q

How is the UK housing market impacting carpet demand?

A

Being driven by the ongoing pressure to build new homes in the UK

31
Q

What is the revenue growth rate of the UK carpet industry and why?

A

Revenue growth estimated at av 2% per year
Due to:
Links to the proprty market and capital nature of carpet purchase for most home owners

32
Q

Is the UK carpet market cyclical?

A

Yes, but it has an attractive underlying level of growth (set 2% per year)

33
Q

What are the % of UK market segments by revenue?

A

Commercial = 40%
Residential = 48%
Transport = 7%
Other = 5%

34
Q

For the residential segment- what drives customer carpet purchasing decisions?

A

Variety of things, but for most is is based on look, feel and price

35
Q

What does a high price indicate in UK carpet market?

A

High price often makes a carpet appear more attractive, as price is often assumed by home owners to be indicator of quality

36
Q

What % of all floor covering sales are carpet sales?

A

60%

37
Q

Whee are hard floor coverings preferred?

A

Usually kitchens, bathroom and high traffic areas e.g. hallways
Increasingly popular recently with rugs

38
Q

Are carpets or hard floors becoming more popular?

A

Hard floors are becoming more popular (combined with rugs) because of combination of
- more efficient heating systems
- preferred furnishing styles
- changing attitudes towards health benefits of carpets vs other floor coverings

39
Q

What is demand for carpet in the commercial segment driven by?

A

Broader set of considerations than residential
Insulation
Acoustics
Resistance to wear and staining
Lease length
Fire resistance
Budget
Sustainability

40
Q

What is a key criterion for both commercial and residential market?

A

Short lead time - with delivery required as soon as possible, often on a certain date

41
Q

How are UK carpets usually sold? (what sales channels)

A

Sold through specialist stores which sell other floor coverings
Retailers may sell both residential and commercial or specialist in 1

42
Q

What additional services are often offered by carpet manufacturers?

A

Carpet fitting service

43
Q

How can commercial consumers purchase their carpets?

A

Either from specialist store or directly from carpet manufacturer

44
Q

What is demand for carpet in the commercial segment driven by?

A

Broader set of considerations than residential
Insulation
Acoustics
Resistance to wear and staining
Lease length
Fire resistance
Budget
Sustainability

45
Q

What is often the key criterion for boht commercial and residential markets?

A

Short lead time
With delivery required as soon as possible and often on a certain date

46
Q

What is often a key criterion driver for residential and commercial?

A

Short lead times
Delivery asap and often on a certain date

47
Q

How are carpets sold ? (What channel)

A

Specialist stores (sell other floor coverings)
May sell both or specialise in 1

48
Q

What services are often offered by carpet retailers?

A

Carpet fitting services

49
Q

How can commercial customers buy carpets?

A

Either from specialist store or direct from manufacture

50
Q

What is the structure of the carpet retailing sector like?

A

Skewed - small number of large national chains dominate the market

51
Q

Who suppliers around 50% of the residential sector for carpets?

A

Specialist retailers Carpetright and Tapi Carpets, along with large home furnishing chains

52
Q

Describe the structure of the uk carpet retailing sector

A

Skewed
Small number of large chains dominate the market
Specialist retailers Carpetright and Tapi Carpets, along with large home furnishing stores, supply 50% of residential sector
Rest of the sector is fragmented - 2,000 retailers overall ranging from medium sized chains to v small single site retailers

53
Q

How many carpet retailers are there overall?

A

Around 2,000 ranging from medium sized chains to very small single site carpet shops

54
Q

How price competitive is the carpet industry and why?

A

Very price competitive
As large national chains can drive the prices down

55
Q

How do small and medium sized buying groups deal with the price competitiveness of the industry?

A

They have collaborated and formed carpet buying groups, which allows them to achieve economies of scale and thus compete more effectively

56
Q

How successful is the recycling of carpets?

A

As they are produced so robustly, they are difficult to break down into raw materials
So recycling is very time consuming and expensive

57
Q

How are most carpets destroyed at the end of their life?

A

As they are built to be so robust they are difficult to breakdown so recycling is expensive and time consuming
So mostly disposed of in landfill or incineration - even though the raw materials are widely recyclable

58
Q

What are the environmental calls for carpet retailing?

A

Increasingly calling for the industry to become more env sustainable as the materials used to make carpets are widely recycled
Want to move towards circular economy- where resources are recognised as finite (usable indefinitely) - so output of one manufacturing process can be reused or reduced as the input of another product, if possible, with minimal loss of resources

Case Study (12 decks)

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