The article and reported study reinforces what I have been saying on the AW Blog for sometime now, that there now remains little difference in market levels between the auction house sale and the gallery/dealer sale. Once auctions were considered the wholesale market and dealers considered retail, and now this has changed. I recall posting on an particular auction where all of the top ten sales went to private collectors. Over the past few years we have witnessed more collectors buying from both dealers and auctions, easily blurring the lines between what was once considered wholesale and retail. The Artnewspaper article states that in many areas the auction house has overtaken the dealer, yet there are still signs of hope for the dealer, as specialist dealers and the desire of confidentiality of a dealer sale can, and other dealer qualities can still be preferable.
The article states there are over 400,000 dealers in major metropolitan markets where about 2% to 5% contribute to over 50% of the total art related sales. This again points out to specialization and dealing at the high end of the market. The article reports many dealers have closed shop and now operate out of homes and online in order to reduce the expensive overhead of a brick and mortar shop. The lack of foot traffic and a dearth of gallery based sales in many circumstances does not justify the expense of a stand alone gallery or shop. Many high end dealers cater to a very select clientele, and a shop with walk in foot traffic is not necessary, and in many cases is not desirable. The internet and art fairs seem to be picking up some the slack for some dealers. The article points out many gallery and dealer have developed and sell directly from websites with mixed results, as many dealers do not have the full sophistication or ability to not only build but maintain advanced sites with constantly changing content as auction house sites
All in all a very interesting article, and one well worth reading by appraisers, dealers, auction house specialists and collectors.
The art Newspaper reports
To read the Artnewspaper article, click HERE.The growth in online sales has been another important driver in making galleries less important for some dealers. However, it is worth noting that while the internet has become an integral communication and marketing device, e-commerce for dealers remains relatively patchy. The subjective nature of the market and the need for advice and personal contact works against more anonymous, less personal online sales. Dealers’ businesses depend on developing trust and credibility, and personal contact is vital and highly valued when arranging large, infrequent purchases such as art and antiques. Because of this nearly all dealers found it difficult to “sell cold” on the internet, but with established clients repeat business using the online channel was common.
High-value, low-inventory businesses are generally less suited to mass marketing through the internet, and the need for discretion and privacy, especially at the high end of the market, also mitigates against using it to attract buyers and sellers. Some dealers pointed out that the more exceptional the work being sold, the more exclusively they worked with a small number of clients and the less they wanted to reveal what they were doing to an online audience.
Finally, many dealers are technological laggards compared with people in similar industries. Although there are a few dealers with exceptionally advanced web platforms, in general auction houses are way ahead in terms of online marketing, sales and the use of technology. With e-retail expected to grow at five times the rate of traditional retail and to overtake its value by 2020, online sales are bound to become important for all dealers, but it still seems likely that most dealers will continue to pursue a model that combines an offline and online presence.j
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