Basel Gallery Industry Survey: Sales Fell 36% In The First Half Of The Year, Online Transaction Volume Nearly Tripled Year On Year

Art Basel and UBS recently jointly released "the impact of the new crown epidemic on the gallery industry: an interim survey report 2020" (hereinafter referred to as the "report"). Based on feedback from 795 art galleries across all turnover levels in 60 different markets, Clare, a famous cultural economist and founder of Arts Economics Dr. McAndrew's lead team analyzed the impact of this year's new crown epidemic on the global modern and Contemporary Gallery industry and high net worth collectors in the first six months of 2020, focusing on the three major art markets of the United States, the United Kingdom and China.

Bad news: sales plummeted, layoffs nearly half

It is self-evident that the sales of galleries have been severely affected by the epidemic. More than half of the galleries interviewed believe that the impact of the epidemic will continue for a long time to come. As nearly 93% of the galleries closed their physical space between January and July 1, 2020, the report shows that overall industry sales fell by an average of 36% in the first half of the year. However, there are also differences in the decline among different regions. For example, the decline of Asian galleries was higher than the average, falling by 41%. Among them, galleries in China fell as much as 55%, while galleries in the United States and the United Kingdom, which have larger market shares, performed in line with the average decline; galleries from South America (- 15%) and Africa (- 21%) became the least affected regions. As for the expectation of the second half of the year, nearly 80% of the galleries believe that the total sales in 2020 will be worse than that in 2019.

Famous cultural economist Dr. Clare McAndrew's team led the latest art market survey report. Materials and pictures

Although the employment structure of the gallery industry is generally very stable, in addition to the daily venue rent and the cost of participating in the art fair, the employee salary has always been one of the biggest costs in the industry. In 2019, the average employee salary even accounted for 26% of the total operating cost of the Gallery. In response to the epidemic crisis, a third of galleries this year had to choose to lay off or lay off some of their staff permanently. Even if the number of employees in the galleries is about $400000 this year, the average turnover of most galleries is as high as $400000. Due to the lack of staff, Clare will have a very cautious response to the selection of artists In addition, the business of galleries is often based on the personal relationship between employees and customers, and layoffs also means that some business relationships will be lost. "To be honest, I think the most worrying thing about 2020 is the continued negative employment dynamics," she said. It's normal for sales to fluctuate, but it's a problem for people in the industry to lose their jobs. "

It is worth noting that a small number of galleries from Asia (Korea, Singapore and Japan) and Australia have "bucked the trend" to increase jobs. Clare explained that this may be due to the restrictions on going abroad in the first half of the year, which, on the contrary, ensures the attention and investment of collectors on local galleries and their related exhibitions. Although the pressure on galleries from the new crown epidemic will continue, three quarters of galleries expect the number of staff to stabilize for the rest of the year. According to the analysis of the report, on the one hand, galleries are optimistic about sales in the second half of this year; on the other hand, it may also indicate that many galleries have reduced their staff structure to the minimum number that can only maintain daily operation.

Good news: Online filling makes young collectors more optimistic

Due to the travel restrictions adopted by most countries and regions in response to the new crown, the two traditional channels of gallery activities - holding exhibitions themselves or going out to attend art fairs - are also greatly reduced in quantity and effect. Compared with last year, the average number of exhibition venues that can be held by galleries has been reduced from seven to four, and the sales volume obtained through the art fair channel has also decreased significantly from 46% to 16%.

Before the epidemic, the art market was somewhat resistant to the online sales model. But judging from this year's performance, digital technology, as the best placer, has become an important means for galleries to establish contact with buyers. The online sales of all levels of galleries have shown an obvious accelerated growth, which provides a channel to ensure sales in the special period. The data show that among the galleries surveyed, online sales accounted for 37% of total sales in the first half of this year, nearly three times higher than 10% in 2019. Among them, new buyers account for 26% of online sales, and 74% are old customers. In the survey, up to 85% of high net worth collectors also said that they had visited online exhibition halls, and about 40% of them had purchased art works through these platforms.

In a pre-2019 study, Clare's team found it difficult to keep collectors focused on buying art in uncertain political and economic environments. This year's epidemic has led many collectors to pay more attention to public health, safety, social and financial crisis, but in the long run, collectors' confidence in the art market has not been greatly shaken. Up to 92% of collectors kept the art market active during the outbreak and bought at least one piece of art. And the collectors who bought them were also more generous. 56% of them spent more than $100000, and 16% of them even spent more than $1 million.

It is worth noting that, on the whole, young collectors seem to be more active in the art market and more optimistic about the future than baby boomers. According to the data, 59% of people believe that the epidemic has increased their interest in collecting, especially among young collectors, and 70% of millennials agree with this view. In response, millennials account for the largest proportion of high spending people, with 17% spending more than $1 million, compared with only 4% of baby boomer collectors willing to do so. Clare pointed out that only 1% of millennial collectors stopped cooperating and communicating with galleries during the epidemic blockade, but as high as 40% in the baby boom group. Clare analysis: "optimism is related to people's sense of control over the situation. The young generation of collectors are outstanding in their return to work and production, so they are more optimistic about the future of the gallery industry. In addition, young collectors who have lived in digital technology since childhood also feel more comfortable and natural with the shift from physical to online exhibitions, so they feel more confident about the future of the art market. "