To Dream, to Collect

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The impact of covid on much-loved museums and other highly visible public art spaces has been continually discussed and dissected over the last few months. Now, however, more attention can be given to the impact on the other half of the art ecosystem: the less visible structure that is the art market, and in particular, modern and contemporary art galleries. The period of speculation is being drawn to a close as the joint Art Basel and UBS Covid Impact Report has recently been published. Unsurprisingly, it demonstrates a widespread, significant disruption and shrinking to the market as whole. Sales have decreased dramatically, and galleries have cut the size of their staff notably.

Related articles: The Art Market Report 2020 - How the blockchain works on the art market - 2020 Hiscox and ArtTactic Online Art Trade Report

The UBS and Art Basel report is an annual summary of the global market, considering each of the key sectors and aiming primarily to monitor its growth. This report lies outside the normal routine of the reports as it comes halfway through the year and is responding solely to the impact of Covid-19. Its focus is also much narrower than is usual, as the data present is taken from a selection of 800 modern and contemporary galleries only. 

The report is comprised of a number of sections, the key findings of which are outlined below: 

Sales

The abrupt dip in sales affected smaller galleries the most. On average, sales dropped by around 40% on average as compared to the equivalent period in 2019. Looking ahead, galleries did not presume 2021 to at all resemble pre-Covid times, but 45% claimed sales would climb from their current point. 

There was a large uptake in online sales, which comprised a third of all gallery transactions taking place in the first half of 2020. Interestingly, it was the bigger galleries – those with over $10 million turnover – that saw the most significant increase in the online sphere. One positive which was that a quarter of all online buyers were new and previously unknown clients for the galleries surveyed, suggesting that the investment in technology and a focus on digital strategy allows galleries not only to retain current clients but also to attract many new sales prospects

 

Courtesy of Art Economics (2020).

 

Workforce

Galleries are known to operate relatively lean operational structures. This, however, didn’t stop one third of the surveyed galleries laying off some of their workforce. The smaller galleries – those with turnover between $250,000 - $500,000 – reported the biggest losses, losing over a third of a combination of their full and part-time staff. This is a dramatic change for these galleries, which on average only employed five people. 

Art Fair sales

Art fairs are the largest revenue source for galleries, as well as their largest outgoing. This meant the cancellation and postponing of fairs was the most keenly felt effect of covid. Sales from fairs – many of which were digital – accounted for 16% in the first six months of 2020, compared with almost 50% for the equivalent time period in 2019. There was an inevitable reduction in costs, which allowed for some compensation for the lost sales channels. 

High-Net Worth Collectors

The report goes into detail about the collecting habits of high net worth collectors and how they’ve behaved during the early stages of the pandemic. The data here is drawn from over 350 collectors from the three largest art markets: The U.S., The U.K. and China (with a focus on Hong Kong). 

This was one of the longest sections of the reports with a wealth of material on these individuals. The overwhelming takeaway was that this group appeared to have remained steadily collecting and involved with the market throughout, with almost 60% reporting that the pandemic had in fact ‘increased their interest in collecting’. 

Some of the more interesting data assessed how their buying approach was shifting, and what criteria the online sphere offered beyond the traditional manner. Generally speaking, these individuals stuck to the galleries they had bought before at, with only 14% looking to connect with galleries previously outside their buying habits. One third claimed they had bought directly from Instagram, and a large majority (81%) suggested it was nearly essential to have some level of transparency regarding the display of price online. Significantly, a similarly large majority did not see these online channels as permanent replacements and planned to travel to art market events including auctions and art fairs in the next year. 

Summary

The report summarises that galleries have had to adapt significantly to conditions in the pandemic and invest in changes they view as long-term. The most apparent in these shifts is removing the overwhelming emphasis on art fairs – and the revenue and networking opportunities that are associated with these – and creating coherent and long-term digital strategies whilst also ensuring their principal clients were properly catered for. 

 

Courtesy of Art Economics (2020).

 

Read the report.

 

Cover image: Courtesy of UBS and Art Basel report 2020. 

Written by Max Lunn

Stay Tuned on Kooness magazine for more exciting news from the art world.

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