Have you ever heard of the ‘Ratner effect’? Or come across the term ‘doing a Ratner’? These terms essentially mean to mess up badly. They come from the name of Gerald Ratner. I’m sure you are dying to know who he was and what he did to deserve such terms owing to his name. Let’s find out.
Who is Gerald Ratner
Gerald Irving Ratner is an influential British businessman and motivational speaker. He was born in London in 1949. He based his authentic philosophy of business on his experiences as a boy in the local market. His unparalleled philosophy suggests that ‘people who shouted the loudest and appeared to give the best offers sold the most’.
The Rise to Glory
Gerald joined his father’s small, fledging jewelry business at the age of 15 after being expelled from grammar school. He spent most of his youth life at the shop cleaning up, running errands, and learning the grassroots of the business.
When he inherited the company, Ratners Group, in 1984, it had 120 insipid, traditional storefronts posting annual losses of £350k. Nobody expected him to turn things around. He decided to employ his initial business philosophy of ‘ shout the loudest and have the most garish eye-catching displays’.
Owing to the strategy, all Ratner stores were plastered with vibrant orange and red posters with all-cap pitches of suitable offers. Everything displayed on the windows was clearly branded with a price tag. In an interview with Financial Times, Ratner explained how he arranged his items and played pop music to attract customers.
Ratner decided to market his chain towards a wider working-class demographic. He sold earrings, bracelets, and rings at an average price of just £20, and as low as £1. This paid off as within six years, Ratners grew to 2000 stores with an annual £125m profit. He even went ahead to buy up competing chains.
In record time, Ratners became a household name and the great democratizer of a previously stuffy industry.
The speech that broke Ratner’s back
Life was going well for Ratner, expensive cars, houses, and he frequented high society events all over the world. His success earned him an invitation to speak at the prestigious Institute of Directors’ annual convention on April 23, 1991. This event was attended by over 6000 businessmen and journalists.
On the Night, Ratner started his speech innocently enough, harping on the event theme’s values. However, three minutes into the speech, for reasons best known to himself, he decided to undo his entire life and the empire he had tirelessly built over the years.
Addressing the critics on his jewelry pricing, he said ‘ people ask “How can you sell this for such a low price?” I say, “because it’s total crap.” To add insult to the wound, he stated that his company ‘sold a pair of earrings for under a pound, which is cheaper than a shrimp sandwich from Marks and Spencer, but probably wouldn’t last as long as the sandwich.’
As you would expect, the media had a field day with these sentiments and ran the story so many times that people started doubting the brand. The next morning, Ratner awoke to utterly terrifying news: his comments had made national headlines to the effect of: “JEWELRY CEO CALLS HIS OWN PRODUCTS ‘CRAP.’” The Sunday Times dubbed him “Gerald Crapner” — a nickname that caught on with disgruntled customers.
The company’s shares dropped £500 in just a matter of days. Initially, Ratner tried to play it off by incorporating special in-store promotions that put a “humorous twist” on his remarks — but within a few weeks, it dawned that what he’d said had taken an irreparable toll on his business. The company had to rename themselves ‘signet group’.
Where is Ratner now?
After losing everything, Ratner toiled in misery for years before eventually making an improbable comeback. In 1997, he took out a £155k loan on his house, built up a health club business, and later sold it for £3.9m. He then used the profits to start an online jewelry company. The Ratners Group rebranded as Signet in 1993 and it is currently the largest diamond retailer in the world.
Today, Ratner gives talks on how to deal with adversity and misfortune and how to keep going despite everything. Making a mistake is not the end of the road for you unless you want it to be. All you have to do is get up and try again and if you fail, try again.
The Ratner effect
In this age where many CEOs are tweet-happy as they are vested with sizable digital audiences where they constantly broadcast into, Ratner’s story is a befitting parable.
Today, the phrase “Doing a Ratner” is a British argot for any time someone says something stupid that undermines their product or customers. This is something that tends to play out more often than it should.
There have been many similar high-profile stumbles over the years. Some of them are;
- Helen Mirren, actress and paid brand ambassador of L’Oreal said that using the company’s products “probably does mess it all.”
- Matt Barrett, ex-CEO of Barclays, insinuated that customers shouldn’t use the bank’s credit card products because they could “pile up debts.”
- John Pluthero, then-CEO of the telecom giant Cable & Wireless, sent out a memo calling his company an “underperforming business in a crappy industry.”
- Michael O’Leary, CEO of Ryanair, called his passengers idiots. On another occasion, he used insulting language to put off customers who ask for a refund
- Chip Wilson, the founder of lululemon, told customers his products “don’t work for certain women’s bodies.”
Now you understand the origin of the terms we mentioned at the beginning of the article.
Ratner isn’t the first person to make a striking error of judgment, nor will he be the last. Infact, many have already followed in his footsteps, unknowingly. Man is to error, but sitting back and watching everything you worked so hard for slipping out of your hands will not help. It is only helpful to get up and forge on.