AI studies the performance of galleries and art-дилеров in 2019

• Right: Urs Fischer
  Author: Stefan Altenburger
  Source: gagosian.com

Analyzing the overall data report The Art Market from 2020 Art Basel & UBS in previous the material, we noted the approach of the leading Art Basel analyst Clare McAndrew for working with data, the private art market. As in past seasons, galleries and art-дилерам were offered a questionnaire. From 7,5 thousand respondents answered about 17 % — their responses formed the basis of the report. Note, however, that the responding respondents provide more than 90% of the market turnover: the information is not considered reliable, but defines trends in private sales — without a doubt.

General data

In 2019 the turnover of the market of private sales of art (galleries and art-дилеры) was $36,8 billion, two percent higher than in 2018. Private sales in 2019 was provided by 297 thousand galleries and private art-дилеров working in the primary and secondary art markets. More than 50 % of transactions in value terms was carried out only 5% of sellers.

Transactions

Segment dealers with a turnover of $500 thousand to $1 million showed the greatest decline (-9 %), while sales in the range of $250–$500 thousand increased more — 17% in quantitative terms. 84 % of all transactions in the sector of private sales (27% in terms of cost, which is 10% less than in 2018) were signed with objects of art worth less than $50 thousand transactions for the sum less than $5 million accounted for 47% of the total number of transactions and brought 6 % of the total income, while transactions amounting to more than $1 million accounted for 2% of the total number of transactions and accounted for 42 % of the total income.

the Average cost of transactions art, 2019:

• Modernism: $43 тыс.;
• Other fine arts (old masters, etc.): $42 тыс.;
• mixed Modern (post-war art, etc): $ 30 тыс.;
• the Decorative art and Antiques: $7,5 тыс.;
• Contemporary art: $7.5 thousand.

the transaction (from negotiations to the transaction and the actual delivery of the work):

• up to 1 month: 48 % (2018 year: 52 %);
• 1-2 months: 27 % (in 2018: 25 %);
• 2-3 months: 15 % (in 2018: 11 %);
• 3-6 months: 7 % (in 2018: 9 %);
• more than 6 months: 3 % (in 2018: 3 %).

Comment AI: the amounts of transactions and their impact on the total turnover of the galleries in the report nothing new written, except that once again reminded us that the average cost sold contemporary art today is less than $10 million (for items sold at art-ярмарках, it is still less, but will cover this in upcoming articles). Over the past year has widened the gap between small galleries and major networks — this is evidenced by the sales. The current formula for margin for small galleries and dealers: it is better to sell more items at a reduced price, focusing on young collectors, than to remain with unsold balance the more expensive of the authors, trying to grab the customer base conditional Gagosian. Noteworthy and time period of transactions: between 2017-2018 if it was substantially reduced, in 2019 increased slightly. It says the following: in the search of optimization of work with customers in recent years, the gallery has tried all means, including the reductionperiod of the transaction. Practice has shown that the choice of gallery time a deal does not affect buyer preferences. So in 2019 the gallery with this a little bit relaxed.

Customers

According to the survey, Art Economics, in 2019 the market for private sales of art, it was difficult to find new buyers. The share of sales to new customers in 2018 increased by 5 % (to 34 %). New buyers have become a more important sales channel for galleries and art-дилеров with lower turnover: they provided 40% of sales galleries with a turnover of less than $500 thousand and 26 % of sales galleries with a turnover of more than $10 million, the Average share of buyers-женщин was 36 %, which is 9 % higher than in 2018. Local buyers (transaction committed within their country) are the most significant segment, they accounted for 61 % of all buyers, and contributed 58% of sales in money terms.

depending on the amount of the transaction the number of local buyers were distributed as follows:

• less than $500 thousand: 67 %;
• $500 thousand. — $1 million: 65 %;
• $1 — $10 million: 53 %;
• more than $10 million: 48 %.

the Age structure of buyers of the different areas of art

the direction of | Age group	To 40 %	40-65 years, %	65 , %
Modern art	21	64	14
Modern mixed	16	61	23
Modernism	7	46	47
More art	5	64	31
Decorative-прикладное art and Antiques	19	62	20

Comment AI: young collectors enter the market through contemporary art and interior design, represented by small galleries. Until they hone their own taste and will not make the acquisition of art in the regular annual budget, a major gallery for them to fight will not. And after — will take the collectors themselves, offer a more meaningful social bonuses. And often — will be taken together with the artists they have been actively collecting.

Artists

Report: Art Basel & UBS showed that 57% of the sales volume of the galleries operating in the primary market accounted for the top three artists of the gallery, and 43% in monetary terms amounted to sale of the most expensive artist of the three. The share of sales of the three leading artists have galleries with sales turnover up to $1 million was higher than those sellers whose turnover exceeds $1 million: 63 % vs. 56 %. These figures are almost consistent with similar data 2018.

the composition of the exhibited artists have galleries that operate in the primary market:

• 31 % — budding artists;
• 44 % — artists in the process of career development;
• 25 % — recognised artists.

the composition of the exhibited artists have galleries working in the primary and secondary markets.

• 25 % — budding artists;
• 44% — artists in the process of career development;
• 31% — recognised artists.

Galleries and art-дилеры the primary market, usuallyfocus on a limited number of artists: in 2019, on average, they were 18 authors (in 2018 — 22).

Comment AI: compared with 2018 the company has increased the proportion of young artists from among the proposed gallery for sale — from 19% to 28 %. The total number provided by the gallery authors has decreased by almost 20%: the "top" of the funnel of entry into the market for artists has expanded, and the bottom (sales), on the contrary, narrowed. The question is, where is the final natural selection answer: mainly on the art-ярмарках in live dialogue with collectors.

the Life cycle galleries

the Peak value of the ratio between the opened and completed its business galleries reached in 2007 (4:1) and since then only decreased. By 2011, the ratio has been halved to 2:1, and in 2019 was 1,2:1. In 2019 the gallery, working exclusively in the primary market, had average sales of $379 million, while the turnover of sellers working only with objects of the secondary market amounted to $5.5 million Among the galleries, working in both markets at the same time, the share of sales accounted for 56 % of the work of the primary market and 44% secondary.

the Average period of work in the market among galleries:

• contemporary art: 12 years;
• modern mixed: 13 years;
• modernism: 30 years;
• other art: 33;
• decorative-прикладное art and Antiques: 34 years
• all the sellers (on average): 17.

Comment AI: in order to successfully sell contemporary art (late in the market, then it is successful) does not necessarily have 30 years of practice —, it is sufficient to look at the average age of the respective galleries. The market clearing of arrogant sellers who opened the gallery space in 2007-2010 on the wave of popularity of contemporary art is nearing its end, with some closing the gallery, turning to art-дилерству, the other is a niche logistics and management of collections. Most leave the art market, without forming a pool of regular customers and not having the budget to develop new contacts through the art-ярмарки.

the Forecasts of market participants for the year 2020

42% of the galleries and art-дилеров expect higher sales in the current year. Compared to forecasts to 2019 (30 %) the level of optimism of constituent entities of the private market have grown. The more others believe the increase in sales to private dealers with a turnover of up to $500 thousand of special interest are the problems faced by the gallery and art-дилеры, in retrospect 2017-2019. In a survey conducted among Art Economics 7,5 thousand respondents, the problems were asked to rank the degree of influence on the total profit, from 1 to 10. From the entire questionnaire AI identified three groups.

influences	Year		the Dynamics of places
	2019	2017
unchanged
the Attraction of new customers	1	1	0
Economics and the demand for art	2	2	0
Participation in fairs	3	3	0
the Increasedsignificance
the Internet and online-продажи	4	9	5
the Strengthening of market regulation and cross-border trade	5	10	5
the significance of the Fallen
Political instability	8	6	– 2
Compete with auction houses	9	4	– 4
Access to new art and artists	10	7	– 3

Comment AI: new customers, demand, and art-ярмарки (places 1 to 3) can be safely combined into one unit — interconnected elements. The increased importance of online-продаж and cross-border trade — indicator that the gallery must be sold and between the fairs (and physical space in recent years began to work badly). One of the outputs — to develop online-продажи. Under the "cross-border trade" arouse interest in the blockchain, and electronic wallets, which would reduce the Commission fees for transactions and currency conversion —, this area just needs to be regulated. But the problems a couple of years ago seemed relevant to galleries and art-дилеров, today look less hostile: political instability does not directly affect the purchasing power of people with money, artists today have learned to offer themselves to the galleries, and the subjects public market — auction house — at the moment should not constitute competition to the private market. First of all-за impossible to work with art in the primary market, in accordance with their charters.

In the following analysis on the basis of the report of Art Basel & UBS 2020 we will examine the work of auction houses in 2019.

Denis Belkevich, AI