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Not everyone is thrilled by the rapid rise of hard surface flooring. Those focused on the industry's soft side-the carpeting and areas rugs that still account for the lion's share of total flooring volume-say their end of the business is being challenged on a number of fronts. While the segment remains firmly entrenched as a core category in flooring, our survey of retailers and contractors suggests that it is an area that is also undergoing a number of significant changes.

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Apart from the growing popularity of laminate, hardwood and other non-carpet options, the universe of carpet sellers is expanding. Most noticeably has been the influence of big box retailers. While there has also been a groundswell of Internet options for buying carpet, they typically do not come from brick and mortar retailers. Those participating in the survey mostly use the Web as a means to draw shoppers to their store. Overall, while it is clear that there have never been more carpet and rug options available, retailers say the biggest issue in the carpet business is eroding profit margins. More than 65% of the respondents said falling margins were impacting their business.

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The study also confirms the scarcity of carpet-only stores. Less than 3% of the respondents said their inventory is exclusively carpet. About 42% said the percentage of floor space devoted to carpet was somewhere between 26-50% while a little more than 25% said it was between 51-75% and 17% said it was between 76-99%. Area rugs, which require much less merchandising space, seldom claim more than 10% of a retailer's floor space. A sizeable majority- 64% -said area rugs occupy 1-5% of their floor space.

Asked to identify their top-selling brand in the residential, commercial and area rug segments, survey participants collectively named a multitude of brands: 22 in residential carpet, 26 in commercial carpet and 20 in the area rug segment. Yet, while there is certainly no shortage of brands vying for attention, the category has two clear leaders: Shaw and Mohawk.

Shaw, for its part, was the top choice in all three segments: In separate questions about the residential and commercial areas, the company was named as the No. 1 seller in each area by about 38% of respondents. Mohawk was a close second in residential with 36% and was identified by about 26% as the top seller in commercial. In the area rug market no one came close to Shaw, which was named as the top seller by 49%. The second brand most frequently named as a top area rug seller was Oriental Weavers, which garnered slightly more than 11% of the responses.

In the cushion segment the big names are Mohawk, which was named as the top brand by about 20%, and Leggett & Platt, identified as the No. 1 seller by just under 15% of the respondents. (No other brand generated a response in double-digits.) Survey participants collectively listed 22 brands as their best-selling cushion brand. They also offered a similarly fragmented answer when asked the average dollar value of cushion sold for a residential setting: Just about 20% said it was less than $250; 28% said it was between $250-499; about 10% said it was between $500-$999; 23% reported the figure to be $1,000 - $2,499 while slightly more than 19% said their typical residential cushion sale exceeded $2,500.

The challenges faced by the carpet category are not, apparently, the result of a lack of enthusiasm on the part of dealers or consumers. Asked how frequently they recommend carpeting or area rugs, just under 90% of the respondents said always or often.

About the same number of respondents said discussions about carpet usually generated a positive response from consumers.

Also, the survey indicates that traditional retailers have little interest in using the internet to sell their carpeting or area rugs. Just under 95% said they were not currently doing so.

The reason was made apparent in the follow-up question. About 70% said profits generated from an Internet transaction were no better that an in-store sale. An additional 23% said they were lower while less than 8% said there was more profit to be online than in a traditional store.