Due to the number of questions we’ve received from clients about how the art market was affected by the pandemic, we decided to share this study of the 2020 art market by Dr. Clare McAndrew, founder of Art Economics. It is an independent and objective study, analyzing the global art market by looking at its different segments such as gallery business, auction houses, changing patterns of global wealth and art collecting, art fairs, online sales, and the economic impact of the art market in general.
Global sales breakdown
Global sales of art and antiques reached an estimated $50.1 billion in 2020, down 22% from 2019 and 27% since 2018.
Online sales of art and antiques reached a record high of $12.4 billion, doubling in value from the previous year, and accounting for a record share of 25% of the market’s value.
Although all three of the major art hubs, the US, UK, and Greater China, experienced a decline in sales, they continued to account for a majority of global sales by value in 2020, at 82%. The US retained its leading position with a share of 42%, with Greater China and the UK on par at 20%.
Sales in the US art market fell by 24% in 2020 to $21.3 billion but remained 76% above their level in the last recession in 2009.
Greater China’s sales decreased by 12% in 2020 to $10.0 billion, the third year of falling sales values, although a less severe decline than its other major peers.
Sales in the UK declined by 22% to $9.9 billion in 2020, their lowest level in a decade, but still 10% above the previous recession in 2009.
Despite its biggest drop in sales since the global financial crisis in 2009, the US market retained its leading position in the global ranks with a share of 42% of sales by value.
The Chinese art market was the first major market to experience lockdowns in the first quarter of the year. However, it regained some momentum in the second half of 2020, and strong sales at the high end of the auction market helped to move Greater China statistically on a par with the UK, with a market share of 20%, up 2% in 2019. The UK retained a 20% share of global sales despite a very challenging year as businesses in the art trade dealt with the pandemic alongside the difficult exit of the UK from the EU. After a strong year in 2019, French sales also fell significantly, with its global share dropping back to 6%. Sales in the EU (excluding the UK) were at 12%, a stable share year-on-year.
Online Sales
Despite the contraction of sales overall, aggregate online sales reached a record high of $12.4 billion, doubling in value from 2019.
The share accounted for by online sales also expanded from 9% of total sales by value in 2019 to 25% in 2020, the first time the share of e-commerce in the art market has exceeded that of general retail. The share of online sales in the dealer sector, including art fair OVRs, expanded threefold in 2020 to 39% from 13% in 2019. Dealers at all levels showed significant increases in the online component of their sales, with the largest advance by those in the $10 million-plus turnover segment (47%).
In the fine art auction sector, 22% of the lots sold in 2020 were in online-only sales, double the share in 2019. Works priced over $1 million made up only 6% of total online-only values, versus 58% for offline sales.
Businesses in the art market
It is estimated that there were approximately 305,250 businesses operating in the global art and antique market in 2020, directly employing about 2.9 million people. More than 2.6 million people were employed worldwide in the gallery and dealer sector in 2020, down 5% year-on-year in about 291,000 businesses.
There were an estimated 14,250 businesses operating in the auction market, including both online and offline companies. Employment in the sector fell by around 2% year-on-year, with significant declines in some of the top-tier auction houses.
The global art trade spent an estimated $16.6 billion on a range of ancillary and external support services directly linked to their businesses, a decline of 16% year on year.
Spending on art fairs went from being the largest area of ancillary expenditure in previous years (at 24% in 2019) to just 10% of the total in 2020. As they continued their digital transformations, dealers and auction houses diverted more resources to IT, with spending up by 80% year-on-year to $3.5 billion, the highest element of ancillary spending.
Major Changes
In 2019 and 2020, one of the biggest changes to the regulatory structure of the global art market was the implementation of the EU’s 5th Anti-Money Laundering Directive (5AMLD), particularly in the UK, as the first of the major international art markets to be formally regulated. The full impact of the Directive is still unfolding, in part because the UK postponed the registration deadline for the art market to June 2021 (from the initial January deadline)
US Tariffs on Photos, Prints, and Lithographs
In 2019, the US imposed tariffs on various EU products, including a 25% tariff on printed books, brochures, leaflets, printed matter in single sheets, lithographs on paper or paperboard created in the last 20 years, and pictures, designs, and photographs printed in the last 20 years being imported into the US from the UK and Germany. These tariffs are set to remain in effect for the foreseeable future.
Art clientele challenges
One of the key challenges consistently identified by dealers over recent years has been finding new buyers. This was even more challenging in 2020, with online channels being the primary means of communication for many businesses for significant parts of the year. Dealers reported anecdotally that while they were able to maintain some level of sales with their existing client bases (and regular clients often buying artists they already knew), it was more difficult to initiate new relationships without the personal contact and face-to-face conversations, viewings, and sharing of expertise that are so intrinsic to the sector.
The size of dealers’ client bases shrank over 2020, with an average of 55 individual clients, down from 64 in 2019. Although the reasons for the decline were likely to have varied for each business, it may have been due to the difficulty in reaching new buyers or strategies focused more on maintaining their established clients. The majority of dealers (72%) had 50 clients or less, while just 15% had over 100.
The average number of buyers increased in proportion to the level of turnover: dealers with turnover greater than $10 million dealt with an average of over 100 buyers, with some dealing from multinational premises reaching a wide pool of international collectors, while those in the segments of annual turnover less than $250,000 averaged 19.
Even within the primary market, however, different segments struggled more than others. Those at the higher end noted anecdotally that not being able to ‘get eyes in front of new works’ was a major struggle in 2020, and that casual or spontaneous discovery and purchasing were very low without art fairs and other live exhibitions and events. Primary market dealers operating at the higher end (with turnover greater than $10 million) had a significantly larger decline in sales of 29% than those at the lower value end (with a 15% decline for those with turnover less than $250,000), where online sales may have been more common.
Another interesting fact that proved true for galleries in the primary market: the higher their share of female artists, the lower their decline in sales.
Collectors Survey
Surveys of 2,569 HNW collectors conducted by Arts Economics and UBS Investor Watch in 10 markets indicated active engagement in the art market despite the COVID-19 pandemic. 66% of those surveyed reported that the pandemic had increased their interest in collecting, including 32% who reported it had significantly done so.
Millennial HNW collectors were the highest spenders in 2020, with 30% having spent over $1 million versus 17% of Boomers. Despite the restrictions in place, HNW collectors still purchased through a range of channels, with 81% having bought art from a gallery in 2020, and 54% at auction.
Dealers were the most preferred channel for purchasing art, with the majority of HNW collectors (57%) preferring to buy from their gallery or physical premises, while 29% liked to purchase from them online and 14% by phone or email.
46% of HNW collectors focused only on galleries they had bought from before, with a further one-third doing this alongside being open to working with new galleries. 41% were only buying works of artists whose work they had bought before. 90% of HNW collectors visited an art fair or gallery OVR in 2020, and 72% felt it was important or essential to have a price posted when browsing works of art for sale online.
After reading The Art Market, which covered all aspects of the international market and highlighted the most important developments in the previous year, we hope that you have a better understanding of the impact of the pandemic on the art market.
Keep an eye out for future blog posts, where we will keep sharing helpful insights and information on the ever-changing world of art.