The flooring industry is finally resembling what a few of us predicted 30 years ago. Its many players are currently in a place between harsh understanding and begrudging acceptance of their futures, and everyone’s scrambling for relevance. The moats protecting it, built by early adopters 60 years ago, are evaporating.

Similar to how department stores ignored e-commerce until Amazon ate their lunch, served it back to them, and then bought the restaurant, the $33.4B U.S. flooring industry faces multiple extinction-level events.

Let's start with some foundational numbers to keep our bearings:

• Industry revenue: $33.4B (2024) has momentarily plateaued
• Mohawk market cap (2024 $6.01B) gross revenue 2024 $10.8B
• Residential segment: $19.8B (58%) of demand
• Commercial segment: $14.4B (42.3%) of demand.
• LVT revenue in residential: $5.65B
• Carpet & rugs: $10.86B (down from 80%+ historical share) 

The flooring industry has created over 60,000 small businesses since 1960, 25% of which are multi-generational. Amazingly, there is little or no succession planning across the businesses that comprise a bulk of its population. This is a primary driver of the current interest private capital has in the industry, and where it sees opportunity in the chaotically disparate nature of the flooring space, and many owners looking for an escape hatch.

There are also three misapprehensions providing the shaky foundations of the old order:

#1: Asian Manufacturing Dependency is Sustainable. 70%+ of LVT/SPC supply comes from Asia. With proposed tariff increases to 65%, we're looking at $2.1B in additional direct costs. That's not a speed bump – it's a wall. And unlike Tesla, which can shift production to avoid tariffs, the flooring industry has spent decades optimizing for Asian manufacturing.

#2: The Installation Workforce is Stabilizing. 65-70% of installers are from immigrant communities. It’s estimated 45-50% could be affected by stricter immigration policies. Translation: the industry could lose 140,000 skilled workers faster than a Silicon Valley startup burns through venture capital.

#3: Traditional Distribution Has Achieved Equilibrium. Floor & Decor ($10.2B market cap) is doing to traditional distributors what Netflix did to Blockbuster – but with better margins. Their warehouse model isn't just disruption; it's destruction of the status quo. 

Winners and Losers

Winners

1. Floor & Decor (FND), whose market cap has grown from $2.77B to $10.2B in eight years. Their growth strategy has been aggressive store expansion and disintermediation from traditional alpha producers. They are essentially the Amazon of flooring but profitable far earlier. Stealthily, they are the prime innovators in logistics and supply chain disruption. 

2. Domestic manufacturers have plowed needed investment of $1.2-1.5B in the past decade to near shore production. This has helped them attain the estimated market share of 40-50% of domestic consumption of LVT (up from 15 to 20%). Estimates show that except Mannington, a majority of LVT is still produced offshore, so there’s still potential for growth. There is also an available vertical integration opportunity for tertiary players. 

3. Tech-forward contractors who were early adopters of digital measurement tools and project management platform capture. They are now a generation ahead on training program knowledge, IP consolidation, and infrastructure development. 

Losers

1. Traditional distributors who consistently demonstrate limited e-commerce capabilities and who are being displaced by major producers in favor of DTC and direct sales. This cohort has stubbornly high overhead and cost to service. They remain vulnerable to disintermediation as brand importance wanes. All of this acting as an accelerant of declining margins 

2. Small contractors will experience a 30-35% potential business failure rate accelerated by current tariff and immigration policies. They are subject to limited access to capital and its costly nature if they can attain it. They are heavily exposed to disruptions in their workforce as most of the labor needed is undesirable. 

3. Asian manufacturers will continue to feel pressure from tariff exposure, political risk, human rights legislation, rising labor costs, transportation challenges, and the momentum of domestic onshoring efforts within their primary export customers.

What’s Happening

The Great Consolidation

Within 36 months, there will continue to be major channel consolidation. The flooring industry will continue to follow the path of home builders – fewer, larger players with vertical integration and technological advantages. Expect three to five major players in each phase in the transaction chain to control 85%+ of the market by 2027. 

The Installation Revolution

The industry must invest $180-220M annually in installer training programs and lobbying efforts to protect its current installation workforce. But here's the real play: robotics and automation. The first company to perfect automated installation at scale will be the next unicorn in the space. Picture Measure Square or Sage working in conjunction with Doosan robotics.

The Retail Transformation

The future of flooring retail isn't stores – it's Disneyesque showrooms with integrated digital experiences. Think Warby Parker, but for floors. The winners will use AR/VR, AI-powered design tools, and seamless project management platforms.

Predictions

• By 2026, Floor & Decor will acquire a major installation company and offer a nationwide installation network. This vertical integration play will double their market cap.
  
  
• A major tech company (my money's on Amazon) will enter the space through an acquisition. The target? One of the top five distributors with established logistics networks. Possibly Floor & Decor or Empire Today?
  
  
• The first fully automated installation system for resinous flooring will launch by 2027, backed by venture capital and strategic industry players. This will be the iPhone moment for concrete flooring preparation and finishing installation. Any already established enterprise in this burgeoning segment has a decided advantage as a player within this initiative.
  
  
• Traditional distribution will continue to follow the path of department stores with a 40% additional reduction in players over 5 years. The survivors will become hybrid digital/physical platforms that are DTC curious.

How to Defy Gravity?

Manufacturers must continue to invest in domestic production now or die slowly. They must continue building direct-to-consumer capabilities and focused end-user relationship equity with focused salesforce verticals. Developing installation and maintenance technology partnerships is essential.

Distributors should sell to Floor & Decor while their valuation still has a pulse. Just kidding (not really). Or move to their model. As the industry continues toward being a platform play, they should invest even more heavily in tech. Leverage the abundance of SaaS platforms and train their knowledge workers in the use of AI to build CX chat capability and solve conflicts. Build or buy your own installation network and promote them like Home Depot promotes Pro.

Contractors must get big, more specific, or get out. Developing multiple recurring revenue streams like maintenance, reparation, project management, and small project/fast response teams as value-added services could stanche the bleeding. 

The flooring industry is experiencing a ground-up reformation. The old boys' network of regional distributors and handshake deals is being steamrolled by digital transformation, onerous contracts, and vertical integration, all powered by millennial and Gen-Z intolerance for staid practice and boomer insouciance. 

The winners in 2026 won't be the companies with the biggest warehouses but those with the best data and most agile supply chains. Rupert Murdoch opined that the world is changing fast, and it will no longer be the big beating the small, but the fast beating the slow. Keep that in your decision-making calculus. 

Some advice? First, invest heavily in predictive analytics – the margins are in the algorithms now, not the inventory. Second, go direct-to-consumer but keep your contractor relationships strong – they're still the kingmakers in luxury and commercial segments. Third, and this is crucial: consolidate or die. The middle market is evaporating faster than spilled coffee on a radiant, heated floor. Small players need to find their niche (high-end design or hyper-local service) or scale up through strategic acquisitions.

The next 24 months will determine the next 24 years. Life is about to get very good for the prepared, and very difficult for the stubborn. The floor is shifting beneath our feet – make sure you're standing on the right side of the fault line.