How Tapi pulled the rug out from Carpetright

Carpetright’s demise has played out publicly in the last few weeks, after it joined the list of high-profile UK brands that entered into administration this year. Its rescuer, Tapi Carpets & Floors, swept in to purchase the chain in a pre-packaged insolvency deal at the end of July.

The Carpetright rescue made the headlines, but there are many threads to this story. As one of the flooring retailer’s closest rivals, Tapi was in fact founded by the same carpet dynasty that launched Carpetright in 1988: Lord Harris of Peckham and his son, Martin.

Below, we unravel the fascinating story of the Harris family, and explore how Lord Harris managed to acquire his own company 26 years after it was founded.

From rugs to riches

Back in 1988, Carpetright was established by the successful businessman Lord Harris of Peckham. Originating in Canning Town, Harris Carpets soon expanded rapidly through a series of strategic acquisitions, including Sunderland’s Storey Carpets company.

In 2007, the business reached a peak of 504 stores. It launched a series of new store openings across Europe, establishing outlets in the Netherlands, Poland, and Belgium.

Investors rolled out the red carpet, with even the tech titan Bill Gates’ acquiring a 3% stake. Not even the financial crash in 2008 was enough to slow the company down.

One year later, in 2009, Carpetright’s closest rival at the time, Allied Carpets, entered into administration, opening the floor to further domination for Carpetright.

Financial troubles

It was in June 2011 that the first signs of wear and tear began to show for Carpetright. The firm announced significant shop closure plans, after posting its first loss since 1993.

The financial strain appeared to put pressure on Carpetright’s leadership team. Lord Harris and his son Martin, who had joined the company in 1991, were unable to manage stakeholder grievances with the new CEO, who left the firm after three profit warnings.

In 2014, Harris Sr. retired, while Harris Jr. went on a yoga retreat. After a 30-day Bikram yoga course, which he said “cleared his mind”, Martin resolved to carry on the family legacy.

By cutting the duo’s shared stake in Carpetright from 17% to 3%, Martin Harris raised £500,000 which he used to launch Tapi, a chain of 200 premium flooring stores in 2015. Lord Harris also joined as a major stakeholder.

Since then, the Tapi brand has gone from strength-to-strength. Last year, the group reported a 38% growth in revenue in the year end to 2021, marking its first profit since launch.

Tapi-ng into success

As Tapi flourished, Carpetright continued to struggle. In 2018, the brand was forced to close 81 of its stores after reporting a full-year loss of over £70m. Its biggest investor, Meditor, delisted the company from the stock exchange in 2019.

Critics say this push-pull relationship is no coincidence. Industry analysts have accused Tapi of poaching Carpetright’s staff and opening new stores next to its best-performing outlets.

As Carpetright’s losses stacked up in 2018, Tapi offered free employment workshops covering CV preparation, interview skills and job search strategies to Carpetright staff.

In response, Martin Harris told the Retail Gazette, “If you’re opening a flooring company and you know that there’s a location that’s really good, do you not go there?”. “In terms of us stealing their staff, I’d flip that around and say that they lost their staff”, he added.

Employee benefits have certainly played a part in Tapi’s strategy. During COVID, it paid out a ‘cost of living bonus’ to any employees earning under £40,000 a year.

Tapi could afford these staff perks as it had smaller overheads than Carpetright, which owned 272 stores in June 2024. Carpet sales have dwindled as buyers turn to hardwood floors, but Tapi’s smaller portfolio of 175 stores gave it a wider profit margin than its rival.

Carpetright unravels

Earlier this year, Carpetright hit a wall. Hackers targeted Cartpetright’s head office in Essex by sending malware, and the company was forced to cease trading or paying staff.

It was the straw that broke the camel’s back. Years of close competition with Tapi had taken their toll, and the business confirmed it had hired PwC to find a buyer for it earlier in July.

Under the terms of the agreement, Tapi acquired Carpetright’s intellectual property, two warehouses and 54 of its stores, which Tapi said will save 308 jobs. Although over 1,000 jobs have been lost across Carpetright’s head office in Purfleet and its remaining 218 stores.

The deal means that Lord Harris has effectively snapped up his own business. He will now help run the firm in a senior position, alongside his grandson, Charlie Harris. Meanwhile, Martin Harris, who stepped down from Tapi at the start of July to pursue other interests, will not be joining his father and son. Could another carpet dynasty be on the cards?

Lessons from Tapi vs Carpetright

The Tapi-Carpetright saga could be an episode of Game of Thrones. But as well as a fascinating business story, it contains a number of takeaways for entrepreneurs:

1. Protect your staff

Tapi’s biggest threat was its more attractive employment proposition. Carpetright’s skilled floor assistants were swayed towards the former’s generous bonuses and greater job security, causing devastating talent leaks.

Prioritising people over profits often generates positive results for both. The Times reports that Tapi was also the only bidder to submit an offer that rescued Carpetright’s jobs and stores; further evidence of its people-focused strategy.

2. Leadership squabbles can sink your business

Like retailer Superdry and the online marketplace Asos, Carpetright’s troubles were accelerated by dissent in the boardroom. Had Lord Harris been more democratic with his succession planning for a new CEO, he might have avoided the fallout.

3. Slow and steady wins the carpet race

Tapi was not the clear winner in the carpet wars. It took the firm eight years to record a profit, and its portfolio was far less extensive than Carpetright’s at the time the latter went under. In today’s economy, though, ambition can be killer; as tech darling Cazoo discovered when it went into administration in May after years of unattainable sales targets.

We’ve got more lessons and case studies on how to avoid business failure in our guide to the top startups that went into administration this year.