October 09, 2015
We provide for many wonderful private and corporate events each year and depending on the occasion, our clients often request a speaker to ensure that their guests are entertained during dinner or an awards ceremony. Generally, attendees can expects a warm talk that includes a couple of motivational quotes alongside a couple of in-depth anecdotes that you might not have heard before. In Gerald Ratner’s case, there was an exceptionally good reason for this.
Back in 1991, Gerald Ratner was the CEO of the Ratners Group, a jewellery firm that shook up the market throughout the 80s due to the rock bottom prices at their ‘Ratners’ stores. Although many jewellers and newspapers labelled their offerings as tacky or cheap, many who wanted jewellery but couldn’t afford to spend hundreds of pounds on a bracelet or necklace were attracted by their selection.
What started out as a family chain eventually grew to be a behemoth on the British high street when Gerald Ratner took the reigns after nineteen years at the company. He’d been there since 1965 and 19 years later, the stores were doing fine but had made little market headway. That all changed when Gerald Ratner put into practice what he’d learned when working at Petticoat Lane Market; it wasn’t those with the best goods that got the most sales from vendors, but those who spoke loudest and had the most eye-catching displays.
With this in mind, Ratner transformed the jewellery shops almost over night, initiating bright orange window displays that loudly advertised prices and deals. Even if you weren’t in the market for some jewellery, huge letters stating ‘50% off’ might at least tempt you to go and have a look. With the already rock bottom prices, sales exploded and from just 150 stores in 1984, the group grew to 2000 stores in 1990. As a result of Ratner’s bold marketing ploy and at the peak of the Ratner Group’s success, Gerald Ratner was invited to speak at a corporate event for the Institute of Directors about how he’d made his company grow so big so fast. In the audience? A large group of high-powered businessmen and journalists, eager to learn his methods.
The speech was by all accounts going very well until Ratner opened up the floor for questions. Upon being asked how he could sell his jewellery so cheaply, he gave this answer:
“...We also do cut-glass sherry decanters complete with six glasses on a silver-plated tray that your butler can serve you drinks on, all for £4.95. People say, ‘How can you sell this for such a low price?’ I say, ‘Because it’s total crap.’”
Which would be bad enough, but Ratner wasn’t yet finished. Indeed, he went on to state that some of the earrings sold in Ratners were:
“...Cheaper than an M&S prawn sandwich but probably wouldn’t last as long.”
Though the comments were apparently meant as a joke (ha ha?), Ratner’s customers evidently didn’t see the funny side and when the speech was reported in the papers the very next day, the effect on the firm was immediate. Almost overnight, shares in the company dropped by £500million (adjusted for inflation, that’s £1.1 billion today) and ‘doing a Ratner’ quickly became a simple way to tell someone they’ve screwed up.
Gerald Ratner resigned from the group in November 1992, during which time the company had closed hundreds of stores, axed thousands of jobs and announced that the incredible loss of profits was due to “a shift in customer spending habits.” Also known as, “Nobody is shopping here anymore due to the effects of that speech from our CEO.”
The very next year, the Ratner Group had changed their name to the Signet Group and set about a financial restructuring. In the past twenty years, the company has ridden through the storm and currently has revenue of around $6 billion. Gerald Ratner himself has since started another jewellery firm, which has a turnover of around £60 million. Incredibly, he’s also available for speaking duties (book him here!) and no doubt, one of his anecdotes would focus on this rather interesting experience.
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By Henry Fosdike