11 March, 2021
Along with many countries in Europe, the UK has now entered its second lockdown driven by a sharp rise in Covid-19 cases and hospitalisations. This decision was not welcomed by all, particularly businesses within the hospitality industry as well as cultural institutions, which already suffered significant financial losses during the first lockdown, despite the government’s £1.57 billion culture recovery package. So, what can lessons learned from the first lockdown tell us about the impact of the second? What will its effect on the art market be?
The first lockdown, and even prior to that, the general public’s fear of the pandemic, led to a 36% drop in art gallery sales (Art Basel & UBS Report, 2020), with smaller galleries suffering the most severe losses. As for auction houses, a report by ArtTactic (2020) found that sales fell by 49% for leading auction houses in the first half of the year. Consequently, financial losses led to significant job cuts, especially in smaller businesses. Art fairs, which were also forcedly cancelled affected the reduction in gallery sales, contributing to only 16% of gallery income, compared to an average of 46% last year (Financial Times, 2020).
One of the major outcomes of the first UK lockdown was the rapid digitisation of the art market, which represented a life line for many art galleries, auction houses, art fairs and other cultural institutions. Data collected by the Financial Times (below), shows a significant increase in online sales in the first quarter of 2020, slightly compensating for losses in physical sales.
However, in an industry that has long lagged behind in terms of technological modernisation, the migration to online platforms has not been an easy one. One of the biggest barriers to online sales has been, on one hand, scepticism on behalf of the buyers and the galleries' inability to create a feeling of urgency for them to buy online, and on the other hand, the art market’s long history of withholding prices. The digitisation of the art market has forced more price transparency and tasked art galleries with the challenge of creating a buzz around their pieces worthy of sparking immediate online sales, rendered more difficult by collectors who continue to be suspicious of online art platforms.
“There is a nagging suspicion many art dealers have used their websites and online platforms to get rid of stock they have struggled to shift in their galleries – somehow imagining that the internet will magically transform their ugly ducklings into swans.” - Robert Read, as quoted in Hiscox, 2020
While 70% of collectors surveyed stated that they preferred seeing art in person, with 15% claiming they did not use an Online Viewing Room during the first half of the year, 59% of collectors actually said that the pandemic “increased their interest in collecting” art, especially at higher prices (Financial Times, 2020). Millennial collectors, in particular, played a key role in sales during this period, as they seemed more comfortable buying art at higher prices (over $1m) during this period, while their boomer generation counterparts (aged 55-73) made no online purchases within this price range. Evidently, if they want to survive, art institutions will need to not only help make their boomer collectors more comfortable with and adept at purchasing art online but also, importantly, embrace the rise of young collectors, who have rapidly adapted to and even welcomed the digitisation of the market.
The debate about whether to pursue online art offerings post-pandemic continues, as the art world seems torn when it comes to this. Renown art dealer, David Zwirner, sees the positives of this modernisation:
“If there were fewer regional art fairs, but stronger online offerings, it could do everyone a favor — and the environment. […] If galleries are closed, how can we sell art? The online platform is something we have envisioned as an important part of what we do.” - David Zwirner, as quoted in Singulart