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Carpetright’s pain stems from its competition, says GlobalData

Carpetright Reigate concept store 725 x 500

Carpetright’s recent profit woes and subsequent company voluntary arrangement (CVA) are linked far more to rival Tapi than to an underperforming UK carpets market says GlobalData, a leading data and analytics company. The shuttering of 92 stores and the lowering of rents across over 100 stores will be a huge disappointment to Carpetright, particularly after the floorings specialist has invested heavily in store refurbishment and a branding refresh since 2016.

Emily Stella Lead Retail Analyst at GlobalData commented:
 
‘‘Carpetright is not alone among big-ticket retailers suffering on the high street – much of which stems from dampened consumer demand amid a weak housing market. But Carpetright is protected from other pressures faced by retailers, namely the shift of consumer spending to online; Carpetright’s stores are not floundering because consumers are buying its products online, they are simply not buying its products. Similarly, while the carpets market has been difficult since 2016, it has outperformed the wider floorcoverings market; and rival Tapi has not seemed to feel the brunt of any market decline.

Floorcoverings and carpets market growth 2013-2023e

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‘‘That leaves only one thing on Carpetright’s mind, and that’s competition. Tapi, run by the son of Carpetright’s founder, entered the carpets space in 2015 and is rolling out impressive-looking stores at rapid speed, many within close proximity to Carpetright’s top-performing sites. While Tapi, which has a total of 93 stores currently, is set to gain 0.6ppts of market share in 2018, Carpetright is forecast to lose 0.2 ppts.

Carpetright and Tapi market shares of total floorcoverings market 2013-2018e

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‘‘Unsurprisingly, Carpetright CEO Wilf Walsh blames its former management, ie Tapi’s current management, for its problems. At the time Carpetright released plans of its possible CVA, Walsh commented, “The aggressive store opening strategy pursued by the company’s previous leadership has left Carpetright burdened with an oversized property estate consisting of too many poorly located stores on rents which are simply unsustainable.”

Source : GlobalData

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12 April 2018

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