HowIre­cov­ered fro­maspeechde­fect

A few ill-cho­sen words to a well­heeled au­di­ence 16 years ago re­duced Bri­tain’s big­gest jew­eller to poverty. Now he re­veals how he bounced back

The Jewish Chronicle - - FEATURES - BY SI­MON ROUND

HERE IS a con­tender for one of the worst pieces of busi­ness ad­vice ever. In April 1991, Ger­ald Rat­ner was por­ing over t h e t e x t o f a speech he was to de­liver to the In­sti­tute of Direc­tors. It was a glit­ter­ing oc­ca­sion, so the multi-mil­lion­aire jew­eller had asked sev­eral peo­ple for their com­ments on what he was propos­ing to say. He called in a pub­lic-speak­ing con­sul­tancy run by Gre­ville Janner. He was tak­ing it se­ri­ously. In such au­gust com­pany, he was de­ter­mined to strike the right note.

Even­tu­ally, he ran the text past a mem­ber of his staff who said: “I think you should put in a cou­ple of jokes. Peo­ple like your jokes. The one that al­ways goes down well is the one about the prawn sand­wich last­ing longer than our ear­rings.”

That gag, and an­other about the rea­son why Rat­ners’ sherry de­canter was so cheap — be­cause it was “crap” — was to cost Rat­ner his place at the head of the com­pany he had built into one of the world’s most suc­cess­ful jew­ellers. It also cost him around £500 mil­lion.

“I made the speech. It went down re­ally well,” he re­calls. “No one thought any­thing un­to­ward about it. The jokes got laughs. The prawn-sand­wich one, in which I said our 99p ear­rings were cheaper than a Marks & Spencer prawn sand­wich and wouldn’t last as long, got a big­ger laugh than the sher­ry­de­canter one.”

So why did th­ese jokes, which Rat­ner had used sev­eral times be­fore, spark a chain re­ac­tion in which he was dis­cred­ited and his com­pany spi­ralled into de­cline?

Rat­ner has had 16 years to think about that. As he is talk­ing, it is ap­par­ent that he is men­tally s e p a r a t i ng his life into p r e - s p e e c h a n d p o s t - speech eras. He now feels that the time is right to tell his side of the story and has spent some time work­ing on a book to that end — Ger­ald Rat­ner: The Rise and Fall… and Rise Again.

What hap­pened af­ter the speech was made, Rat­ner says, was down to the fact that, “ba­si­cally, it was a good story for the Daily Mir­ror and The Sun. They mis­in­ter­preted my speech on pur­pose. It was 1991, there was a re­ces­sion go­ing on and they were hav­ing a go at so­called fat-cat bosses.

“When they saw the word crap in the speech — which was an un­usual ex­pres­sion for a busi­ness­man to use — they saw it as an op­por­tu­nity to have a dig at me and ac­cuse me of mak­ing fun of my cus­tomers. Which was ridicu­lous.”

Un­for­tu­nately for Rat­ner, the avalanche of bad pub­lic­ity (the Sun­day Times, for ex­am­ple, re­named him “Ger­ald Crap­ner”) co­in­cided with a se­vere eco­nomic down­turn.

“I stayed with the com­pany for 18 months,” he re­calls. “It was a dif­fi­cult time and things were never the same as they were be­fore. It was painful — we were clos­ing a lot of Rat­ners shops and the busi­ness was go­ing badly. But then we re­con­structed, I brought in a new chair­man and there was some light at the end of the tun­nel. A lot of com­pa­nies, in­clud­ing Next and French Con­nec­tion, were also go­ing through a bad time dur­ing this pe­riod but came out of it hugely suc­cess­ful.”

But not Ger­ald Rat­ner. A year-anda-half af­ter the speech, he was called into the of­fice of Jim McAdam, the man he had brought in to turn around the for­tunes of the busi­ness. McAdam’s mes­sage was blunt: “Ger­ald, I’m go­ing to get rid of you. It just isn’t work­ing.”

So ended the as­so­ci­a­tion with the com­pany his fa­ther had founded and the only job Rat­ner had ever had. There fol­lowed five years of rel­a­tive in­ac­tiv­ity and poverty.

“I just couldn’t be­lieve it,” says Rat­ner. “I was sit­ting at home one Sun­day morn­ing a few years be­fore the speech, and I was think­ing: ‘Am I dream­ing all this? I’ve bought all th­ese jew­ellery busi­nesses, and made a huge suc­cess.’ When it all went wrong, that, too, seemed like a dream… a huge roller­coaster ride that doesn’t hap­pen to many peo­ple.

“I re­mem­ber walk­ing through Hyde Park one day and just be­ing so an­noyed that I had lost it all over some­thing as daft as a speech.”

Rat­ner’s sal­va­tion came from an un­likely di­rec­tion — his bi­cy­cle. “I went cy­cling be­cause I was at home a lot and I had time. The cy­cling kept me sane. I still cy­cle 28 miles a day even now. I was cy­cling this morn­ing.

“Most peo­ple, in­clud­ing me in the past, worry too much about all the prob­lems they have. Even though I am now run­ning a rea­son­ably suc­cess­ful busi­ness, I still take the time to ride my bike. I re­ally en­joy it and it means I don’t put on weight, though I do like eat­ing.”

With dis­arm­ing hu­mour, h e a d d s : “ I sup­pose t he cy­cling is the one good thing to come out of all of this. It sounds ridicu­lous, doesn’t it? I lost 500 mil­lion quid but I gained the cy­cling. I sup­pose most peo­ple would pre­fer to have the £500 mil­lion.”

B u t , o f course, some­one for whom busi­ness was an ob­ses­sion was not go­ing to be sat­is­fied for­ever with a con­stant rou­tine of cy­cling and day­time. Nei­ther was he sat­is­fied with the monthly salary of £3,500 he was able to draw — all that re­mained of his Rat­ners for­tune.

“My wife came in one day and told me she was go­ing to leave me if I didn’t get out of the house,” Rat­ner re­veals. “This was quite ironic — my first wife left me be­cause I was never at home.” Some­thing had to change.

And when it did, Rat­ner cashed in on his no­to­ri­ety: “Af­ter I left in Novem­ber 1992, I did a few con­sul­tancy things which didn’t amount to much. Then I had an idea for a health club. The thing about health clubs is that they are ba­si­cally all the same — they have a pool, a gym, an aer­o­bics stu­dio, a beauty place. The fact that I had this fame meant that ev­ery­one in Hen­ley [Ox­ford­shire, where the health club was to be sit­u­ated] was talk­ing about the health club. When it even­tu­ally opened in 1997, we had 2,500 mem­bers, which is one-fifth of the pop­u­la­tion of Hen­ley.”

When Rat­ner gets go­ing, he gets go­ing. “If you re­ally think a horse is go­ing to win, you put a lot of money on it. It’s the same in busi­ness. I man­aged to bor­row £155,000 against my house which took me into neg­a­tive eq­uity. You need that con­fi­dence. It was my sal­va­tion. I was a pariah. I went to count­less banks and they all re­fused me money. They said no one would join my health club. In 2001, I sold it for £3.9 mil­lion.”

He in­vested half the money in his new in­ter­net jew­ellery busi­ness, Ger­al­don­line. Again, the banks were not in­ter­ested. Again, he per­sisted: “I went to all the top in­sti­tu­tions. I said I wanted to raise five mil­lion. I didn’t

get one penny. They told me that noth­ing would sell on the in­ter­net . The one thing I have learned is not to take a blind bit of no­tice of the banks and the City.

“Fun­nily enough, the busi­ness did re­ally well, which is why I started writ­ing this book in April. I didn’t want to write it on a down note. Mind you, as soon as I started to write it, the busi­ness went through a bad time. At one point I thought I might have to come up with a dif­fer­ent ti­tle, maybe The Rise and Fall and Rise and Fall.

“We’ve sorted it out now. It was all to do with a prob­lem with search en­gines. Also, we are di­ver­si­fy­ing into shop­ping chan­nels and I in­tend to buy a num­ber of shops. I ac­tu­ally made a bid to buy back the UK wing of my old busi­ness —£350m, all fully fi­nanced. Things are go­ing much bet­ter.”

Rat­ner can thus claim to have made a multi-mil­lion-pound for­tune not once but twice, and has run three suc­cess­ful busi­nesses.

Not that there was any clue how this would come about dur­ing his school ca­reer. “I just wasn’t in­ter­ested in school what­so­ever. I went to Hen­don County Gram­mar and was ex­pelled for be­ing so stupid. It just didn’t in­ter­est me. Even when I started work I wasn’t that both­ered. That all hap­pened later.

“I had quite a Jewish up­bring­ing and would go to syn­a­gogue on the High Holy-days. Ev­ery­body around me was Jewish. In those days, there was no such thing as a non-Jewish friend.”

Num­bereda­mongth­eJewish­friends dur­ing his teenage years were Charles Saatchi, who would go on to make his for­tune in ad­ver­tis­ing, and Michael Green, the fu­ture boss of Carl­ton.

W h e n h i s friends started to do very well in busi­ness, Rat­ner found the mo­ti­va­tion he had pre­vi­ously lacked. “When I started at work, I en­joyed it but I had no great de­sire to be suc­cess­ful,” he says. “What changed was that, when I was head­ing to­wards 30, the thing be­came to be suc­cess­ful and drive flash cars and have some money. So I thought I would do that, too. It was as sim­ple as that, re­ally. I was de­ter­mined.”

Rat­ner’s op­por­tu­nity came sooner than he might have ex­pected. His fa­ther Les­lie, who had built up the Rat­ners busi­ness, be­came ill with a brain tu­mour. It was be­nign but af­fected his be­hav­iour. “Be­fore, he was very pa­tient, un­der­stand­ing and kind,” says his son. “Af­ter­wards, he didn’t have a fear of any­thing. In fact, he didn’t seem to have a lot of feel­ings gen­er­ally. If a bomb went off out­side his house, he wouldn’t have flinched.”

So, at the rel­a­tively young age of 34, Rat­ner took over what was, on the face of it, a suc­cess­ful busi­ness. How­ever, the 120-shop chain was los­ing hun­dreds of thou­sands of pounds. It looked as if the busi­ness would be swal­lowed up by its com­peti­tors. In­stead, un­der Rat­ner ju­nior, t h e r e v e r s e h a p p e n e d . Within seven y e a r s , there we r e 2 , 5 0 0 shops, and Rat­ners had a 50 per cent share of the UK mar­ket and 12 per cent of the US mar­ket.

“The busi­ness took me over com­pletely. I’m the sort of per­son who gets com­pletely ob­sessed, but the ex­cite­ment of turn­ing it around ob­sessed me at the cost of ev­ery­thing else. Even on Satur­days, I was visit­ing stores, and when I was at home my mind was still on the job.”

He re­calls study­ing com­peti­tors for ideas. “I could see the peo­ple who were do­ing well were the ones who were dis­count­ing and scream­ing about their of­fers. They were tak­ing our busi­ness. We didn’t have sales in those days. We used to turn our noses up — we thought they were re­ally low­er­ing the tone. Soon, we were hav­ing sales, too. In fact, we had sales 52 weeks of the year one way or an­other.”

If his down­fall taught him any­thing it was that there had to be more of a bal­ance in his life. “Now, if I buy a cam­era,” he says, “I will spend a lit­tle time work­ing it out and en­joy­ing it. Back then, it was just an­other thing to throw in the drawer.”

So what is the most im­por­tant thing in his life right now? The new busi­ness? Rat­ner thinks for a while: “At the mo­ment, the most im­por­tant thing in my life is my dog, which has had an op­er­a­tion on its leg. Then there are my four chil­dren and my bike. Oh, I for­got — my wife!”

He pon­ders and adds: “As some­one once said, no­body lies on their death bed and thinks, ‘I re­ally should have spent more time in the of­fice.’”

Not that Ger­ald Rat­ner plans to give up work, even though he can now af­ford to. “I stopped when I was 41 — not by choice — and I didn’t re­ally start work­ing again un­til I was in my 50s. So I feel I’ve al­ready had my re­tire­ment. I’m now go­ing to carry on work­ing un­til I drop dead.”


Rat­ner re­ports for his first day at work at the fam­ily firm, aged 15.

Meet­ing Mar­garet Thatcher for a private lunch in 1989

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