Fine Art tested by pandemic: caution online channels waiting for reopening

Fine Art turnover dropped about 22% in 2020. Online selling went up from 9 to 25% of total business, but the most expensive artwork put at auction are sold in live events.

Covid-19 brought important changes in the Fine Art’s market, forcing gallery owners, agents, fairs and auction houses to change their working methods to keep maintaining a relationship with their clientele of collectors and enthusiasts: besides to new digital works of art, which have recently made headlines for the exponential growth of their market, supported by new technologies, the industry as a whole is moving online.

During 2020, the Fine Art market registered a drastic turnover reduction: according to a recent Art Basel report, in conjunction with UBS Bank, the worldwide industry made a total of 50,1 billion dollars, accusing a 14 billion loss, which is a 22% reduction compared to 2019, and 27% to 2018. 

Coronavirus forced a huge number of art galleries to temporarily shut down and 61% of worldwide fairs have been called off, as well as public auctions. As a matter of fact, the situation led to a more cautious attitude of the owners, who decided to invest in less valuable art works, waiting for better times to sell their most valuable goods. The consequence of this diminished presence was a cut in ancillary costs (-16%) and staff with an employment reduction of 5% in the whole industry, along with a drop of the overall transactions, to its lowest level since 2009.

Retail market suffered a physiological reduction (just think that the expenses for the fairs represented only 10% of the total), while online sales increased. «Despite the contraction of sales overall, the component of online sales of art and antiques reached a record high of $12.4 billion, doubling in value from 2019. The share accounted for by online sales also expanded from 9% of sales by value in 2019 to 25% in 2020» reports The Art Market 2021 by Art Basel.

A never-seen-before growth in this market, as shown in the following graph from the same report.

Galleries, dealers, auction houses and organizers of art fairs invested more in new online sales channels than ever before, reaching US$ 3,5 billion (+80% compared to previous year), the largest share of ancillary cost in the industry. Investments were made on hardware, software, and own websites, but there was also an increase in relying on e-commerce platforms, virtual showrooms and auctions broadcasted online.

The result is that, in terms of turnover, the share of online sales in the Art Market overtakes the one of other industries (General Retail) in 2020. 

Online selling has been a support to the sector during the health emergency and 90% of the wealthiest collectors visited an online art fair in 2020, however 57% of them preferred to buy from gallery or other physical appurtenances. In addition, auction sales valued at over $ 1 million were just 6% of those sold online, compared to 58% offline. Another significant figure is the demographic relationship: 30% of “millennial” collectors have spent over 1 million on the Internet, against 17% of the “boomers”.

Online channel has its limits and direct relationship, along with the reopening of fairs, is among the priorities for the near future for art dealers and gallery owners, after having seen a customer base reduction during 2020 and a 20% drop in sales ($ 29.3 billion in total). The turnover of auction houses also dropped by 30% (17.6 billion dollars), even though they tried to recover the loss with private (+ 36%, in total 3.2 billion) and online sales (22%).

Although audiences are showing increasing confidence in the digital medium, 68% of the wealthiest clients would like to attend a live event by September and 80% by the end of 2021. Security, trust, the value of personal relationships and the aura of an art work among priceless assets that enthusiasts hope to fully appreciate again.

 

SOURCE: The Art Market 2021 by Art Basel  https://d2u3kfwd92fzu7.cloudfront.net/The_Art_Market_2021.pdf

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