Words choice that collapsed a business empire
Today we are going to discuss about Gerald Irving Ratner, a British businessman who formerly served as the chief executive of Ratners Group, a significant British jewellery company. He became well-known after giving a speech in which he mocked two of the company’s goods.
Gerald Ratner, who was raised by Jewish parents in London, developed his business philosophies as a result of his experiences there as a young lad. He used to say “who shouted the loudest and seemed to make the best deals.”
In 1966, Ratner joined the family business and later served as CEO of a network of incredibly prosperous jewellers. The stores’ use of neon orange signs promoting deep discounts and their low price ranges as well as their shock to the formerly conservative jewellery business.
The stores and their goods were exceptionally well-liked by the public despite being commonly viewed as “tacky,” up until Ratner gave a speech at an Institute of Directors meeting at the Royal Albert Hall on April 23, 1991.
In his speech Ratner said,
“We also offer cut-glass sherry decanters for £4.95, which come with six glasses and a silver-plated tray for your butler to use while serving you beverages. How can you sell it for such a low price, people ask. I respond, “Because it’s absolute crap.”
(Full speech of Gerald Ratner can be viewed here.)
In order to further exacerbate the situation, he said that one of the pairs of earrings was “cheaper than a prawn lunch from Marks & Spencer’s, although I have to admit the meal will probably survive longer than the earrings.”
The day after his speech, Ratner made an appearance on BBC1 chat programme Wogan in the UK to apologise and clarify his earlier joke that some of his company’s items were “absolute trash.”
Ratner’s remarks have become classic illustrations of why CEOs should be careful with their word choice. Customers avoided Ratner stores during the uproar that followed. After the speech, the Ratner group’s worth dropped by almost £500 million, almost leading to the group’s demise.
In an effort to calm the crisis, Ratner recruited a chairman, but Ratner was later fired by the new firm chairman in November 1992. In September 1993, the organisation changed its name to Signet Group.
The famous Ratner speech serves as an illustration of how image and branding are more important than quality. Such errors are now occasionally referred to as “doing a Ratner” in the corporate world. Ratner has stated that he didn’t intend for his comments to be taken seriously. He attributed the harsh customer response to what he called the aggression and purposeful misreading of certain media sources. In fact Ratner was not keen in using these words in his keynote. During one of the causal discussions with few media people and friends, Ratner used these words. The media advisers suggested Ratner to use these in his speeches as they may project him witty and humorous. If you want to know more about the rise and fall of Gerald Ratner, read his biography “The Rise and Fall… and Rise Again”. He has vividly described the emotional turmoil that he underwent after the speech at the IOD.
Gerald Ratner struggled in despair for years after losing everything, but he ultimately made an unlikely recovery. He later acquired a £155k (US$203k) mortgage on his home in 1997, developed a fitness club company, and later sold it for £3.9m (US$5.1m). He then started an internet jewellery business with the proceeds. The Ratners Group changed its name to Signet in 1993, and today it is the biggest reseller of diamonds in the world.
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