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Merton Industries
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Case Analysis
Overview of Merton Industries
Merton Industries is a privately held manufacturer of a full line of medium- to high-priced carpet primarily for the residential segment, although about 28% of total sales are contract sales to institutions and businesses. The company markets its product under the Chesterton and Masterton brand names. Merton currently distributes its line through seven floorcovering wholesalers, who in turn distribute to 4,000 retail outlets including department, furniture, and floor covering stores. Eighty percent of residential sales were made through 50% of the retail accounts. Total sales in fiscal 2000 were $75 million; Figure 1 shows the breakdown of sales to residential and to institutions and businesses. Advertising by Merton appeared primarily in shelter magazines and newspapers. A cooperative advertising program with retailers has been expanded. This program is being well received and has brought Merton into closer contact with retail accounts.
Figure 1. Merton Sales in FY2000
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Nature of the Industry
The U.S. carpet and rug industry has gone through some vast changes in the past decade. The number of U.S. carpet and rug manufacturers has dropped greatly due to changes in consumer preference and foreign competition. The type of retailers and the retailer purchasing strategies have changed drastically also. Currently, Merton Industries, a small carpet and rug manufacturer has had to face these changes in a re-evaluation of their distribution process.
The U.S. carpet and rug industry recorded sales of $11.69 billion at manufacturers’ prices in 1999. This translates to estimated retail sa ...