Argos, were actually expanding the market by attracting a whole new
segment of customers. Prospective customers were able to carry the attrac-
tively laid out catalogues around with them to make price comparisons.
However, no one believed that the large independent sector would expand,
particularly by organic growth, as the traditional methods of trading were
under threat. The market was becoming more clearly segmented, with a
polarization between the luxury end of the market and the products offered
by the multiples. A number of industry commentators thought that it would
be difficult for consumers to distinguish between one multiple and another.
The performance of Arthur Conley & Sons indicated to many the attrac-
tions of moving to the ‘better’ end of the market. Part of the Sears Group,
they had been in the low to middle price range. The company changed its
name to Walker & Hall and proceeded to refurbish its 60 stores. The first
store converted was the in-store branch at Selfridges, where they raised the
quality, improved the range and increased many prices between two- and
five-fold. The turnover increased by an order of magnitude in the space of
a year. Brian Franklin, the managing director, criticized jewellers who sui-
cidally reduced their prices, and other jewellers were similarly experi-
menting with modern re-fits.
Gerald Ratner ́s growth strategy
Taking over as Chairman after a boardroom coup, Gerald Ratner’s response
to this fragmented, depressed and confused industry was characteristically
iconoclastic. He had started work in the family business at the age of 16,
having been expelled from his grammar school after telling his headmaster
at a teacher’s funeral that he shouldn’t bother leaving the cemetery.
Working as a salesman, he lacked patience with the sedate traditional jew-
ellery industry and had little impact until 1982, when he became joint man-
aging director beside his father. The working relationship was not
particularly successful; his restlessness and openness led to many board-
room rows when he felt that his ideas were not given due attention. When
his father was away in America, Gerald abruptly moved the business
downmarket for the first time, putting notices in shops advertising reduc-
tions on watches. The business picked up. When his father returned he told
him that the other directors did not want him to run the business, and he
told the other directors that his father wanted him to run the business.^2
At the time Ratners was losing money and share prices were generally
low: Ratners was quoted at 39p and Walkers at 43p. The concern was for
‘further steps to improve efficiency and stock rationalization’. Gerald nev-
ertheless set about the expansion of the business by buying up sites and
acquiring other smaller chains, whilst squeezing margins to increase
turnover. As he was quoted:^3
The referral and influence market domains 255