Books: Pearls of hard-won wisdom

Gerald Ratner's 'crap' speech cost him his family business, but he bounced back, still not sure what he did wrong. Chris Salt reviews a life story with real lessons.

Last Updated: 31 Aug 2010

Gerald Ratner: The rise and fall... and rise again; Gerald Ratner; Capstone £18.99.

Infamy, infamy. They've all got it in for me! More Kenneth Williams than Shakespeare's Julius Caesar. But there's a lot about jewellery retailer Gerald Ratner's autobiography that feels like the world has it in for him.

It started with the tabloid headlines in April 1991 following his disastrous 'crap' speech at the Institute of Directors ('People say, "How can you sell this for such a low price?" I say, because it's total crap.'). But it continued for the following months when he stayed in place at the fast-failing jewellery company, and his time in the wilderness, until his partial rehabilitation through Geraldonline, said to be the UK's largest online jewellery business.

Even now, having penned his life story, you get the strong sense that the very likeable Ratner (how can you not like someone who still cherishes Van Morrison's Astral Weeks?) still doesn't quite know why he was the subject of such ire; why people still use the phrase 'Doing a Ratner'; why his infantile jokes branding his product as crap caused such a tragic fall from grace.

As Ratner writes: 'I had worked hard for 30 years, making millions of pounds for shareholders and creating thousands of jobs for a company I loved, and I suddenly had it all taken away from me. Not for doing anything criminal. I hadn't embezzled. I hadn't lied. All I had done was say a sherry decanter was crap.'

The Ratner that was the brash millionaire, full of chutzpah and with an almost naive knockabout sense of humour, is certainly chastened by his experience of quite literally losing the family jewels. But why bother reading a story that we all know well already?

Ratner himself believes that the most interesting thing about his story is the 'rise again'. It's not. That episode is described sketchily and the return to the jewellery business occupies just 14 out of 254 pages in his tome.

Instead, for me, two things stand out from Ratner's book: first, it's a case study of how retailing nous shaped a winning formula on both sides of the Atlantic. Second, it highlights the importance of context in communications.

There is no doubt Ratner transformed the family business. Started by his father in 1949, it was stalling by the time Gerald took over the reins. He may have been useless at school, but Ratner was keen to learn things from the bottom up. He was good with numbers and had the necessary smarts to succeed. An early trick was making competitors reveal their sales figures by phoning up stores and pretending to be head office.

He loved being in the shops and watching how customers made decisions. He was an instinctive marketeer, quick with ideas and plugged into the brash, bright buzz of the Eighties.

One of his smartest moves was to buy a close competitor - Terry's - and then adopt its marketing approach. Typical of Ratner, he agreed to a price before knowing he could get the finance.

By 1986, he was retailer of the year and had turned around the company. He was feted by the great and the good and received the kind of recognition he had long desired (and envied - both his childhood friends, Charles Saatchi and Michael Green, had reached fame and fortune somewhat faster).

Having become big in the UK, he looked to the US for further growth (something that any number of UK businesses before and after have failed to achieve). He was wise enough to allow the American managers to run the US jewellery business their way.

Above all else, Ratner had developed a formula and he stuck to it. The key was savvy positioning with customers, tight buying controls and disciplined merchandising, supported by good employee relations. By 1990, his empire stretched to over 2,000 shops on two continents. He was the biggest jeweller in the world. Some achievement.

The second takeaway concerns communications and the need to fully understand the context in which you are communicating. Ratner's downfall was less about what he said than the situation in which he said it. Proof of this is the fact that he had used the same old jokes about crap decanters and earrings for years. In 1988, three years before that 1991 speech, a Financial Times profile had first put them into print along with other comments that are not in his book, such as: 'Diamonds are a very bad investment - especially ours.'

But by the time of the IoD address, the context had changed. The heady days of Thatcherite economic liberalism had given way to recession. People were struggling to pay mortgages. They were in negative equity or being laid off in droves. And just as his customer-base was suffering, Ratner, in a very public way, flaunted his disrespect for them. He was blind to the context in which his words would be communicated. They destroyed the Ratner's brand by saying that cheap equalled crap.

As the well-known PR Lynne Franks later said to Ratner: 'All you did wrong was give an Eighties speech in the Nineties.' She was absolutely right.

Ratner's remarks will forever be infamous. His three-act book is reminiscent of a Shakespearean tragedy. Just as with Julius Caesar, Lear or Macbeth, the plot features the downfall of a 'hero' through his own hubris.

Ratner's life story may not be the most fulfilling read, but it contains lessons for us all. Most tragic heroes undergo some change in fortune. Ratner certainly did. But they often achieve some kind of revelation or recognition as part of their journey.

And although Ratner may still, deep down, be puzzled as to why his comments caused such personal disaster, today he seems a happier, more contented soul. So good luck to him.

Chris Salt is founding partner of the HeadLand Consultancy.

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