When art dealers rushed to sell their wares online in the wake of the COVID-19 pandemic last year, they may have thought of reliance on this sales channel as a short-term measure. New data from ‘Resilience in the Dealer Sector: A Mid-Year Review 2021’ (available for free download here), authored by Dr. Clare McAndrew, renowned cultural economist and founder of Arts Economics, suggests it may be anything but.
Sales by the dealers surveyed, accounting for those transacted both via their own websites and art fairs’ Online Viewing Rooms (OVRs), accounted for some 37% of revenue in the first six months of 2021, suggesting that the massive shift online may outlive the pandemic that brought it about. Published by Art Basel and UBS, the report is based on a survey of some 700 art and antiques dealers spread out over 54 regions or countries.
“Both the research on dealers and collectors indicated that this shift to online sales has certainly not been a transient one, and 95% of the dealers we surveyed predict online sales will continue at this level or grow over the next year. Dealers were slowly moving in this direction anyway, but many have now invested a great deal of capital, time and human resources in building their online strategies and platforms. It has been a means to maintain contact with buyers and reach new ones, particularly in the absence of events. There hasn’t been a reversion to the pre-pandemic schedule as yet, and it’s still to be determined if that will ever happen. The artworld’s events calendar is certainly still very disrupted this year - many art fairs are still suspended, and a lot of the ones of that have gone ahead, have had to work with limited capacity, so online channels have remained critical. Apart from reaching new buyers, around one quarter of the sales dealers made online this year were to collectors that were already working with them, but that were buying online for the first time. Once they have stepped over that line, it seems likely that they may do so again, even if it’s not their preferred way to buy, “ Dr Clare McAndrew, the author of the report noted.
Dramatically increased travel and the lifting of lockdowns in many countries where these dealers do business might have suggested the online channel would recede in importance. But online sales dropped only two percent from 2020. And dealers only expect that they soon will be on the rise again: almost two-thirds (64%) predicted they would make yet more sales online in the coming year. Hoping to capitalize on this movement, half of gallerists cited online sales and exhibitions as their top priority for the year.
Dealers saw plenty of reason for encouragement. Sales ticked up by 10% year over year, with just over half (51%) selling more than in the first half of 2020. The recovery was weighted to those with the highest turnover: all dealers at levels upward of $1 million saw sales improve, while those who sold upward of $10 million experienced the greatest increase, of some 21%. Galleries with turnover below $10 million largely remained stable.
A dramatic spike in collecting by high net worth individuals (HNWI) bolstered the recovery. Their spending leapt by some 42% on average, to $242,000 – even higher than in the full year of 2019. Millennials drove the recovery, spending more than three times as much as their older peers, an average of $378,000. The fastest-growing spenders were women, who grew their expenditure by over one-third, to $410,000, while men spent only 9% more.
Robust sales helped dealers bring back the employees lost as a result of the pandemic. While nearly a quarter (23%) downsized in 2020, a quarter were hiring in 2021, while just 13% lost staff. Dealers employed an average of seven people in the first half of the year, the same number as in 2019.
Despite the travails of the pandemic era, dealers were overwhelmingly optimistic at the close of June, with almost all (91%) expecting that sales would either increase or remain stable in the 12 months to come. More than three-quarters (78%) predicted they would be able to maintain the same number of employees; 18% were even looking to expand.
Data from the report suggests that one thing driving that expansion may be sales of purely digital artworks of the kind that many dealers had given scant thought before this year. A gold rush to NFTs (non-fungible tokens) began when a work by artist Mike Winkelmann, aka Beeple, sold for an astonishing $69.3 million at Christie’s in March. Now, almost half of HNW collectors (48%) are interested in purchasing digital artworks over the next 12 months. In the end, this trend may, like the turn to online sales, last longer than many art industry observers would ever have predicted.