Will the coronavirus (COVID-19) be the catalyst to finally ignite a still hesitant online art market? This is the question that all observers of the art market ask themselves. I could take a neutral stance and find good reasons to say “yes”, “no” or “maybe”. But I will dare a "yes", hoping that this expected boom will not be the consequence of a frenzy linked to such a long confinement. The main reason is that social distancing will last long enough to change the way we buy art and many other things. We will no longer know the joy or the pangs of crowded art fairs and openings. Sellers are going to have to find new ways to create the spark that drives us to buy NOW, lest we miss the opportunity to acquire new treasure that we believe would be essential. I don’t know how they will do it, but I’m sure they will. Like every year, I hope you will find this report useful as we look forward to seeing what happens next: in the immortal words of Captain Jean-Luc Picard “Things seem impossible until they do”.
Robert Read
Art and Private Client Director, Hiscox
Main conclusions:
ONLINE SALES STALL, BUT 2020 COULD BE A PIVOT YEAR
Online sales of works of art and collectibles stagnated in 2019, generating sales of approximately $ 4.82 billion - a 4% increase from 2018. The growth rate of this market has steadily declined in recent years, from 12.5% in 2017 to 4% in 2019. The COVID-19 crisis has forced the art world to a screeching halt, almost without warning, the online marketplace has become the sole promotional and sales channel for much of the industry. The majority of the platforms surveyed expect a positive effect of the epidemic on the online market in the long term. Is it finally time for the art world to turn to digital technology?
RAPID GROWTH IN SALES OF "OTHER COLLECTIBLES"
With 32% of sales, works of art constitute the largest market share of online art and collectibles sales, significantly ahead of watches and jewelry sales (23%). 'Other collectibles' such as stamps and memorabilia now account for a quarter of online sales and, as traditional auction houses particularly seek to attract young collectors, we expect to see interest. increasing for this segment.
A MARKET WITH DISPARATE GROWTH PATTERNS
Online platforms present a wide range of growth patterns; while Heritage Auctions recorded a 0.5% decline in sales in 2019, Sotheby's online auctions grew 55%. We have also seen some failures, with Paddle8 filing for bankruptcy in March 2020.
CHRISTIE’S, SOTHEBY’S AND HERITAGE REACH ONLINE TURNOVER OF $ 1 BILLION
The online revenue of these three auction houses increased from $ 636 million in 2015 to $ 1.0 billion in 2019, an increase of 58% (representing an annual compound growth rate of 12 , 1%). The COVID-19 crisis has dramatically boosted online sales, with Sotheby's posting a 131% increase in the number of lots sold online at this point in the year (May 2020), and a 74% increase in the average price per compared to 2019. Heritage Auctions reported a 10% increase in online sales over the first five months of the year.
LARGE GALLERIES COULD STAND AS MAJOR PLAYERS IN THE ONLINE MARKET
About 63% of online platforms expect existing art market operators, such as galleries, to emerge as major online players when they finally turn to digital technology.
IS IT FINALLY THE TIME FOR THE ART WORLD TO TURN TO DIGITAL TECHNOLOGY?
Over the past few months, we've seen many galleries embrace technology solutions, from private online showrooms to virtual reality. However, some large galleries like David Zwirner and Hauser & Wirth have taken the concept of online gallery to another level, offering small galleries and art fairs the opportunity to exhibit and sell through their digital platforms, transforming thus these large galleries in third-party online sales platforms.
CONSOLIDATION AND CONVERGENCE
A large majority of platforms (67%) believe that the online art market will be dominated by a handful of international players in the next five years. While the top ten platforms represent roughly 68% of the entire online marketplace, 48% of those we surveyed believe there is a real possibility that an outside player will disrupt the market. Tight market conditions due to COVID-19 could accelerate potential consolidation, or even trigger a wave of acquisitions by the strongest players, including traditional auction houses keen to expand their online presence.
4% growth in online sales in 2019, but COVID-19 quickly boosted online sales. 63% of online platforms expect large galleries to be the new leaders in the online market. 48% of online platforms believe that disruption of the market by an outside player is very likely in the next five years.
Source : https://www.hiscox.fr/