ularly in the 9ct gold ranges. Significant cost savings were achieved by
using their increased volume in their dealings with suppliers, trading 27
tonnes of 9ct gold and a quarter of a million carats of diamonds in their
most successful year. The closer relationship with suppliers allowed them
to dictate design, which was vital to a group selling a ‘disposable’ fashion
item. Most prices were held year on year and in some cases reduced. By
April 1990 Victor Ratner, deputy managing director, was able to claim^5 that
‘a particular bracelet sold for £38.95 at Christmas 1988 was sold at £29.95
the following Christmas with only a slight loss of weight, and would be
cheaper again at Christmas 1990’.
Innovation also involved rapid copying of expensive items. Princess
Diana’s engagement ring, originally priced at £30 000, was copied and
available in Ratners stores in four days, priced at £28.50, selling 10 000 in
one day. The group were the first to offer hollow jewellery, representing a
significant cost, and price, reduction. The reduced margins were also made
possible because of the increased efficiency that Ratners were able to bring
to their stores. Stocks were kept to a minimum in the stores, with increased
holdings in the central warehouses connected by EPOS. Restocking usually
occurred twice a week rather than the previously fortnightly cycle. This
also helped to address the cash-flow problems caused by seasonality and
the required payment in advance.
By the beginning of 1986 the group had grown to 173 stores and
announced its intention to become the largest jewellery store in the UK.
Although plans were in place to add a further 40 stores organically, funded
by a 1 for 4 rights issue at 112p, expansion eventually came by the usual
method. In May, Ratners paid £4.3 million to take a 27.7 per cent stake in
H. Samuel’s, having acquired the shares from family members who were
frustrated by the recent performance of their shareholdings. By the end of
the month Mr Edgar, Samuel’s Chairman, had been persuaded to accept
£149 million and the chairmanship of the combined group for his share-
holding, with Ratner as group chief executive. In August he resigned and
Gerald Ratner assumed both roles. Andrew Coppel became Group Finance
Director, joining from Morgan Grenfell Finance Ltd, where he had been the
director advising Ratners over the previous 18 months. Sale and lease-back
of the stores started to recoup some of the costs of the acquisition, and the
merchandising and marketing methods used in Ratners and Terry’s were
quickly introduced to the H. Samuel’s stores, which continued to operate
under their own name. The buoyant property market had helped the group
as one portfolio of properties realized £8 million over book value and
brought lease costs of £1.1 million per annum on a 25-year lease, with five-
year rent reviews. By the end of the year the group were able to report a 40
per cent increase in turnover at the H. Samuel’s stores, bettered only by the
improvement in the Ratners branches, where 50 per cent increases had been
achieved. Additionally, the group opened 40 new stores.
The referral and influence market domains 257