23 THE POWER OF TWO
LITTLE WORDS

Two little words were to cost Gerald Ratner several million pounds, his own job and those of many of his employees. It was also to result in a new term being added to the lexicon of marketing – “Doing a Ratner”.

In 1984 Gerald Ratner had taken control of the jewellery business his father, Leslie, had founded 33 years earlier. Over the next few years he steadily built the company so that it became the UK’s leading specialist retail jeweller.

His approach was to focus the business solely on retailing and to target the lower end of the market. He helped turn jewellery into a more regular purchase for the ordinary consumer rather than just a special or occasional one. Ratners was, for a number of years, a highly successful low-margin, high-volume business model.

Then in April 1991, Gerald Ratner was invited to speak at the Institute of Directors’ annual conference. Believing that his audience would appreciate some humour in what was potentially a rather dry and worthy speech, he referred to one of the products they sold as “total crap”.

Unfortunately his comment wasn’t seen as humorous or simply honest. Instead, people felt it represented a disdain for his customers. Worse still, it was immediately and widely reported in the media. Ratners was rechristened as “Crapners”.

Customers responded by deserting the store in droves and sales fell dramatically. This, combined with an economic downturn and the company’s high levels of debt, meant that the whole company quickly descended to a point where it nearly folded.

Ratners was forced to sell off some of its assets, including Watches of Switzerland, which was sold to Aspery’s in June 1992. In November of that year, Gerald Ratner resigned as Chairman, his position having become untenable.

In September 1993, Ratners announced that it was changing its name to Signet and was switching its shop fasciae to Ernest Jones, H. Samuel or Signet.

Gerald Ratner wasn’t the first and probably won’t be the last to“Do a Ratner”, but his name will be forever associated with the term used whenever a senior executive of a company makes a highly inappropriate or derogatory remark about their brand or their customers.

And the moral is that if you don’t believe in your brand, why should anyone else? Are you and your fellow employees true advocates for your brand?