The Rug Company

The Rug Company logo

Invested:
November 2015

Exited:
Unrealised

Sector:
Consumer

Stage:
Mid (core strategy)

Headquarters:
London, UK

Region:
Global

Business:
Leading luxury rug brand

 

Business at time of investment

The Rug Company (“TRC”) was a leading global brand in contemporary designer rugs with an established international sales presence through 10 own showrooms and a number of franchisees and concessions worldwide. The Company was the market leader in the UK, had developed a solid position in the US, and had entered Germany in late 2014.

Founded in 1997 by Christopher and Suzanne Sharp, the Company sells high-quality, contemporary rugs, serving interior designers as well as high-end retail customers.  The Company has built a strong reputation for design, based on its own in-house collection and through ranges developed in exclusive collaboration with iconic designers such as Alexander McQueen, Diane von Furstenberg, Kelly Wearstler, Paul Smith and Vivienne Westwood.

Investment rationale

The investment The Rug Company stemmed from Palamon’s ongoing thesis work into the favourable growth dynamics of the affordable luxury retail segment.  There is an opportunity for well-positioned European brands to rapidly accelerate growth in a global market and in particular those which meet the increasing consumer demand for quality and artisanal craftsmanship. The Rug Company is an attractive opportunity to back a high-quality brand and product platform in the £5 billion global residential luxury and affordable luxury rug market, which grows at c. 7% p.a.  Within this segment, design-led contemporary rugs are gaining share from more traditional designs.  The Rug Company is the global leader in this segment, which puts it in a position to significantly outperform competitors.  The luxury rug market today is highly fragmented and TRC can leverage its position to gain market share by displacing smaller local players, as well as to grow the overall market by displacing other types of floor covering.

Value creation

  • Built out a highly experienced senior team: Recruited a new CEO, Chairman and NED. Reinforced the senior executive team and appointed highly experienced commercial leaders for US, EMEA, Digital and Contract.

  • Shift to B2B2C: accelerated shift to Trade sales to interior designers acting for (U)HNWI, increasing repeat sales and sales visibility and supporting the scalability of the business. Relocated showrooms from high-street to interior designer hubs and invested in custom/bespoke design capabilities. Expanded trade focussed sales teams

  • US expansion: Expanded showroom footprint, sales leadership and design team in the lucrative US market, a principal hub for (U)HNWIs and largest residential and commercial luxury rug market

  • Launched new channels: Launched a new website as critical enabler of TRC’s omni-channel approach and added immersive digital tools. Launched commercial trade sales channel to address £3bn global contract luxury rug market. Introduced new Global Partnerships model.

  • Significantly expanded product range: Broadened product architecture with new styles catering to a range of price points and use cases to expand market reach and increase penetration of interior designer customer base. Introduced handtufted capabilities to address the large, high-end commercial projects segment.