The Strange Story Behind Tapi vs Carpetright

Carpetright’s demise has become public in the past few weeks, after it joined a string of high-profile British brands to file for bankruptcy this year. Its rescuer, Tapi Carpets & Floors, stepped in to buy the chain in a pre-packaged bankruptcy deal in late July.

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

Below we explore the fascinating history of the Harris family and discover how Lord Harris managed to take over his own company 26 years after it was founded.

From carpets to riches

In 1988 Carpetright was founded by successful businessman Lord Harris of Peckham. Harris Carpets, which had its origins in Canning Town, quickly expanded through a series of strategic acquisitions including Storey Carpets in Sunderland.

In 2007, the company reached a peak of 504 stores. It began a series of new store openings in Europe, opening locations in the Netherlands, Poland and Belgium.

Investors rolled out the red carpet, with even tech tycoon Bill Gates buying a 3% stake. Even the financial crisis of 2008 wasn’t enough to slow the company down.

A year later, in 2009, Carpetright’s biggest rival, Allied Carpets, filed for bankruptcy, paving the way for Carpetright’s continued dominance.

Financial problems

In June 2011, Carpetright began to feel the first signs of wear and tear. The company announced significant store closures after posting its first loss since 1993.

Financial stress was clearly putting pressure on Carpetright’s management team, with Lord Harris and his son Martin, who joined the company in 1991, unable to cope with stakeholder complaints about the new CEO, who left the company after three profit warnings.

In 2014, Harris Sr. retired, and Harris Jr. went on a yoga retreat. After a 30-day Bikram yoga course that he said “cleared his mind,” Martin decided to continue the family tradition.

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

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

Stepping into success

While Tapi flourished, Carpetright continued to struggle. In 2018, the brand was forced to close 81 of its stores after posting an annual loss of more than £70m. Its largest investor, Meditor, delisted the company in 2019.

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

As Carpetright faced mounting losses in 2018, Tapi offered Carpetright employees free employment workshops covering CV preparation, interview skills and job search strategies.

In response, Martin Harris told Retail Gazette: “If you’re opening a flooring business and you know there’s a really good location, don’t you go there?” “In terms of staff theft, I would turn it around and say they’ve lost staff,” he added.

Employee benefits have certainly played a part in Tapi’s strategy. During COVID, it has paid a ‘cost of living premium’ to all employees earning less than £40,000 a year.

Tapi could afford such employee benefits because it had lower overhead costs than Carpetright, which had 272 stores as of June 2024. Carpet sales have fallen as customers have turned to hardwood flooring, but Tapi’s smaller portfolio of 175 stores has given it a higher profit margin than its rival.

Carpetright is falling apart

Earlier this year, Carpetright hit a wall. Hackers attacked Cartpetright’s Essex headquarters, sending malware, and the company was forced to either stop trading or pay its staff.

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

Under the terms of the deal, Tapi took over Carpetright’s intellectual property, two warehouses and 54 stores, which Tapi said would save 308 jobs. However, more than 1,000 jobs were lost at Carpetright’s Purfleet headquarters and the remaining 218 stores.

The deal means Lord Harris has effectively taken over his own business. He will now help run the company in a management role, alongside his grandson, Charlie Harris. Meanwhile, Martin Harris, who resigned from Tapi in early July to pursue other interests, will not join the father and son. Could another carpet dynasty be in the offing?

Lessons from Tapi vs Carpetright

The Tapi-Carpetright saga could be an episode of Game of Thrones. But in addition to being a fascinating business story, it contains a number of lessons for entrepreneurs:

1. Protect your staff

The biggest threat to Tapi was a more attractive job offer. Carpetright’s skilled cleaning assistants were convinced by generous bonuses and greater job security, which caused devastating talent leaks.

Prioritising people over profits often produces positive results for both parties. The Times reports that Tapi was also the only bidder to submit a bid that saved jobs and Carpetright stores; further evidence that this strategy is focused on people.

2. Leadership disputes can destroy your business

As with retailer Superdry and online marketplace Asos, Carpetright’s problems were precipitated by boardroom dissent. If Lord Harris had been more democratic in planning the succession of the new CEO, he might have avoided the consequences.

3. Slow and steady wins the carpet race

Tapi wasn’t a clear winner in the carpet wars. It took the company eight years to turn a profit, and its portfolio was much smaller than Carpetright’s when it collapsed. But in today’s economy, ambition can be deadly, as tech darling Cazoo learned when it filed for bankruptcy in May after years of missing sales targets.

For more lessons and case studies on how to avoid business failure, check out our guide to the best startups that went into administration This year.