The Rug Company

Business at time of investment

The Rug Company 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 £3 billion global luxury and affordable luxury rug market, which grows at 4 – 5%.  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 two non-executive directors to the board and added six new senior roles across the executive team.
• Launched new channels and strengthened sales force:  Expanded showroom footprint across the US and Europe and built new outbound B2B sales team in the US and UK focused on covering growing demand from interior designers.  Invested extensively in a doubling of the size of the sales force. Launched a new website as critical enabler of TRC’s omni-channel approach.
• 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 a range of rugs to address the large, high-end commercial projects segment. Launched collaborations with Farrow & Ball and Perennials performance rugs.