Washington, DC, June 13, 2014 -- Investor website The Motley Fool has profiled the business strategies of The Dixie Group and Mohawk Industries, particularly as they relate to carpet as carpet continues to lose marketshare.
The website details how the companies take completely different approaches to the market, with Dixie focusing on a more exclusive clientele with higher priced products while Mohawk focuses on a broader clientele in both hard and soft surface products as it continues to cut costs.
It describes Dixie as product-driven while Mohawk is manufacturing-driven.
The story notes that Dixie's carpet sales have grown 69% since 2009 while the industry only expanded by 11% over the same period.
In the past three years, Mohawk has grown its overall revenue and operating income by 11% and 20%, respectively, as it has completed several major acquisitions.
While the average price of carpet in the residential market is approximately $8 per square yard, Dixie's prices between $10 and $50 per square yard. Nearly 40% of its Fabrica sales involve a designer, the story says.
Rather than focusing on a narrow part of the carpet market, Mohawk has diversified its hard product offerings through the acquisition of Pergo and Marazzi, among others as soft floorcovering sales make up slightly more than a third of Mohawk's revenue.
Also, "By using the fiber from its internal manufacturing operations, Mohawk can reduce inventory costs and spread its fixed overhead over a large revenue base. In contrast, the high fixed cost of making fiber makes it uneconomical for smaller companies like Dixie to follow suit," the story notes.
"Mohawk has relied on its scale to achieve cost benefits and efficiency. On the other hand, Dixie has turned its lack of scale to its advantage by focusing on what it's best at," the story concludes.