CONTEMPORARY ART MARKET TRENDS GALLERIES AUCTION HOUSES
In an essay for Taiwan-based art magazine Artco, Art Radar founder Kate Cary Evans discusses the tectonic shifts that have emerged in the Hong Kong art scene over the past decade and what they mean for the future. Part I discusses the challenges galleries face.
Read the original ARTCO article here (traditional Chinese).
Waves of change are sweeping through Hong Kong’s gallery structure, pummelling it into new shapes. The arrival of the mega-galleries, Gagosian in 2011 and White Cube in 2012, is the most recent evidence of these shuddering upheavals.
In this essay we look at how changes to the Hong Kong gallery scene are underpinned by deeper transformations in technology, the economy and the retail environment.
Gallery system broken
“The gallery system is broken!” shouts an art newspaper’s headlines. “The gallery system is structurally weak,” echoes an art market report. Indeed the competitive environment for contemporary art dealers around the world is now fighting fierce.
In spite of the Debt Crisis in Europe and the United States, both homes to significant art markets, this state of affairs is not due to a diminished appetite for art. Artprice reports that “art in fact sold better in 2011 than at any other time in history with USD11.57 billion in total global annual revenue, up USD2 billion versus 2010…” and adds that this is a world-wide phenomenon and not just evident in Asian markets.
If last year’s art market was extraordinarily strong, what is going on? Why the panicky headlines? There are several reasons.
Encroaching of auction houses
The challenges facing art dealers are systemic and spill over borders. A 2011 study commissioned by the Confédération Internationale des Négociants en Oeuvres d’Art (Cinoa) examined the issues international dealers face today. A recurrent theme is the increasing power of the auction houses, which are encroaching on the primary market. Many dealers now compete with them for clients and stock, and this is not the only problem. A middle man has arrived, too.
Art fairs: another middle man layer
The art fair is creating big problems for the dealer. It is true that the art fair allows a dealer to develop client relationships in new geographical markets without a heavy investment. This is a valuable benefit.
But at the same time art fairs provide collectors with a short cut, allowing them to bypass gallery visits altogether. Art fairs filter out lesser galleries and vet artworks for quality. With the best works by the best dealers now gathered in one place for the convenience of the collector, why trail around town? Predictably, reports are coming in that gallery openings are more sparsely attended than in the past.
The middle man swallows a portion of profits, too. As well as the usual rent and salary costs, dealers now have to pay fair-related fees.
Exclusive access to artworks under threat
The most significant protection against competition for the dealer’s business is his ability to tie down privileged or exclusive access to artworks. But artists want wider platforms than a single gallery for their work. They are increasingly unwilling to sign exclusive or restrictive contracts with galleries and, especially in Asia, will happily gallery hop or work with multiple galleries.
Some artists now view galleries as pesky gatekeepers rather than promising gateways, and are themselves becoming sophisticated self-marketers with the ability to exploit multiple promotional channels. Artists are becoming new competitors. In the future, galleries will need to offer a wide market, important collectors and an imprimatur of a top brand to be sure that artists will give them exclusive access to works.
Some dealers are responding to the harsher competitive environment by reducing costs and closing gallery spaces. Instead, they travel extensively to attend art fairs, meet clients and hold pop up shows. But this may not be enough. Let us take a look at the general retail environment to see why.
Dealers lag general retail trends
The retail landscape has been profoundly altered by globalisation and mass production over the last fifty years. Globalisation has created a more homogenous customer base, where regional variations in customer tastes blur. To exploit this change, retailers have responded by developing chains of multiple outlets in different geographical areas.
At the same time, they have responded to the proliferation of consumer product options triggered by mass production technologies by investing heavily in building recognisable brands for themselves and their suite of products.
The problem is that this process has barely begun in the art market and is only evident at the highest end. Dealers like Gagosian, White Cube, Hauser Wirth and David Zwirner, says art consultant Szanto “have pulled away from the pack, but the question is, where does that leave the regular rank and file gallery?”
The underlying difficulty is that the “rank and file” gallery is part of one of the last industries where the old ‘mom and pop’ retail model still dominates. A single owner with a single outlet serving a local market is increasingly rare in the wider retail world because it is simply not viable. As soon as one market participant builds scale and brand value and benefits from the ensuing profits, the other participants must do the same or eventually disappear.
On top of this, retailers are facing the next revolution: the shopping process is going online. Today’s art dealer is already behind the curve as the next juggernaut engine of change pushes in on them.
Read the original ARTCO article here (traditional Chinese).
This essay was written by Art Radar founder Kate Cary Evans and first published in the Taiwan-based magazine Artco, who have given permission for republication.
- What is ahead for contemporary Asian art, 2012 and beyond? Part II – January 2012 – part 2 of our trend series focuses on how the role of galleries is shifting with globalisation
- Swiss collector opens Art Supermarket in Hong Kong… but is it? – November 2011 – one potentially new model for the high-pressure world of galleries in Hong Kong
- Auction houses grow: Can art dealers compete? The Art Newspaper – August 2011 – an article in The Art Newspaper considers how the growth of auction houses is forcing galleries to adopt new sales models
- Contemporary galleries face intense competition, must re-think game plan – January 2011 – How many galleries are getting squeezed by real estate prices and competition from auctions?
- Is globalisation of the art market slowing down? The Economist reports – June 2010 – With the continuing predominance of Western contemporary artists at auction, is globalisation of the art market overstated?
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