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

As the second lockdown kicks in, it is clear that for now, until what would seem to be next summer, art institutions will have to continue driving sales online, learning to create a virtual buzz around their works.

While we can make several predictions about how the second lockdown will affect the market based on the one we had at the beginning of the year, it is important to note that, for the time being, the overall impression is that this lockdown appears to be slightly less strict than the previous one. Uncertainty around the rules of the second lockdown, mainly the fact that individuals are still allowed to meet one member of another household in a public space, has brought with it a sense of flexibility. 

Galleries and museums have had to close their doors to the public from 00.01 on Thursday, November 5th; however, they will undoubtedly continue to do as much business over the next four weeks, with some even continuing to offer private viewing to collectors wherever possible. 

“If a collector wants to come in next week to specifically see a painting with a view to buying it, I will let them come in, socially distanced, with one other person. The message is ‘keep on doing business’, and we can do business behind closed doors.” - Polly Robinson Gaer, Executive Director of Thaddaeus Ropac’s London gallery, as quoted in The Art Newspaper

These private viewings are key, as they will allow galleries to continue attracting collectors, who are not comfortable making purchases online without having seen the work in-person and nourish those relationships. 

Some galleries will also take this opportunity to bring in their staff and set up new exhibitions so that they can be ready for collectors post-lockdown, or encourage more interest in their collections through online shows. 

What is clear is that, although galleries and museums are still recovering from the first lockdown, they have learned lessons from the start of the pandemic and are ready to apply them to the second round of restrictions. For instance, on the evening of the fourth of November, just before the second lockdown was due to start, 26 galleries across London stayed open late (until 8pm or 9pm) in a collaborative effort to give visitors a last chance to view shows. Collaboration, maintaining relationships with loyal collectors, finding new ways to interact with clients and investing in diversification as well as digitisation are what will allow the art market to persevere during these challenging times. 

Unfortunately, the government has not ruled out an extension to the lockdown. All that is left for the art market is to exercise patience and solidarity, while collectors and viewers can support the art world by attending virtual gallery viewings and auctions, making online purchases and donating to their favourite cultural institutions. 

At London Trade Art, we will continue to offer all of our usual services during the lockdown. Please feel free to contact us if you have any enquiries regarding our artworks or fine art advisory. 

Sources:

Anny Shaw, ‘London galleries to accommodate collectors “by appointment” during second coronavirus lockdown’, The Art Newspaper, 2020, https://www.theartnewspaper.com/news/london-galleries-plan-to-stay-open-by-appointment-during-second-coronavirus-lockdown

Melanie Gerlis, ‘Art Market Reports Shows the Devastating Impact of Covid-19’, Financial Times, 2020, https://www.ft.com/content/ff6530b4-1c40-497c-bd23-c5a70e552401

Naomi Rea, ‘Still Recovering From The First Lockdown, Museums and Galleries Will Close Again For At Least Four Weeks’, Artnet, 2020, https://news.artnet.com/art-world/england-lockdown-museums-galleries-1920118

Robert Read, ‘Insurers sense opportunity as lockdown drives fine art online’, Hiscox London Market, 2020, https://www.hiscoxlondonmarket.com/blog/insurers-sense-opportunities-lockdown-drives-fine-art-online

Singulart, ‘Lockdown Increases Interest in Online Art Market’, 2020, https://blog.singulart.com/en/2020/04/24/lockdown-increases-interest-in-online-art-market/