Art Market Correction Survival Tactics – artmarketblog.com
Let’s face it, art auctions are mainly about two things – money and excitement. Best suited to those buyers who don’t care what they buy as long as it is a potentially profitable bargain, art auctions are far more beneficial to the investor than to the collector. Auctions are not really suited to collectors at all because a collector usually looking for specific works which means that they don’t have the option of bidding on a different work or a work by another artist if the one they are after goes beyond their budget. Although a bargain may be picked up by a collector, the likelihood of the next work they want to purchase exceeding the estimate is just as likely. What this means is that if the collector is willing to pay what ever it takes to acquire a work for their collection, the bargains that they may have acquired at other auctions could effectively be canceled out. In the end it would probably have been far better for the collector to have purchased from a gallery where the prices are relatively stable and the pressure involved in making a purchase is far less.
When times are good and the art market is full of speculators and trophy hunters the art auction industry buzzes with excitement and anticipation as records are broken and money seems to be in endless supply. When a financial crisis influences the market and causes buyers to be far more cautious the art auction industry looses much of it’s lustre. When the art market no longer offers the same excitement or the same potential for making a quick buck and the acquisition of a trophy work doesn’t carry the same cachet, the factors that make the auction method of conducting a transaction attractive begin to subside. It is at this point that the gallery and the art fair start looking like a much better option for buyers owing to the fact that fairs and galleries don’t require split second decisions and allow for time to engage with a work of art and time for making a decision.
One of the major benefits that galleries and art fairs have over the auction industry is the ability to educate clients and potential clients as well as allowing them to interact with artists. Education and interaction give clients and potential clients the opportunity to actually experience the artist and their work, the effects of which can be extremely positive. It is easy to underestimate the impact that education and interaction with an artist can have on a potential buyer but when you have worked in the art industry you quickly realise how powerful education and interaction can be. The financial crisis has meant that those galleries that could stick pictures on the wall then sit back and watch the money roll in can no longer do so and are having to work extra hard for their sales. Potential customers need to be convinced that they are making the right decision which is where the education and interaction with an artist come into play in a big way.
Evidence of how important the role of education and interaction can be for an art related business was evident at the 2008 SOFA expo (http://www.sofaexpo.com) in Chicago which was held this past November. The SOFA expo is an International Exposition of Sculptural Objects and Functional art or in other words, contemporary decorative arts and design. According to the post expo press release the expo was a major success with high attendance figures and reports of extremely strong sales which were driven in part by the educational component of the fair. Lectures, panels and artist conversations were a major part of the expo and undoubtedly played a major part in it’s success. “There’s a spill-over effect to sales when one of my artists speak,” said exhibitor Charon Kransen, who saw a bounce from Simon Cottrell’s lecture enjoyed by 115 attendees. “My loyal clientele keeps returning,” Kransen added.
Those galleries and dealers who are able to utilise the tools that they have at their disposal and use a bit of ingenuity stand the best chance of surviving the art market correction. Those galleries and dealers that refuse to adapt to the conditions and do not recognise the areas in which they can make improvements or adaptations to maximise sales will be the first casualties of the correction, and rightly so.
**Nicholas Forrest is an art market analyst, art critic and journalist based in Sydney, Australia. He is the founder of http://www.artmarketblog.com, writes the art column for the magazine Antiques and Collectibles for Pleasure and Profit and contributes to many other publications.