What New Order Will The Art Market Have In The Future?

Recently, Art Basel and UBS group jointly released the fifth edition of Art Basel and UBS global art market report written by famous cultural economist Dr. Clare McAndrew, which comprehensively and macroscopically analyzes the global art market situation in 2020, analyzes the impact of the new epidemic on the market, and puts forward the market forecast for 2021 and the future. Thanks to the fight against the epidemic, the decline in sales in the art market in 2020 has become a major trend, but the crisis has also provided impetus for reform and restructuring. Recently, Dr. Clare McAndrew gave an exclusive interview with 21st century economic reporter to explain in detail the major changes in the art industry in 2020.

Global art market meets the biggest crisis in the past decade

The outbreak of new crown pneumonia has brought the global art market into a period of uncertainty in 2020. Many art institutions have been forced to suspend business temporarily. In recent years, various types of art sales activities (art exhibitions, art fairs, etc.) that have played an important role in sales in the world have also been cancelled. Because the art trade is essentially a non essential transaction, and it has been achieved by free purchasing power, offline activities and travel for a long time, the art trade under the crisis is particularly vulnerable. Although many art dealers and auction houses have found "plan B" through online platforms or other means, the epidemic has caused serious damage to sales and employment in the art industry.

The report points out that in terms of overall sales, the global sales of art and antiques in 2020 is estimated to reach $50.1 billion, a decrease of 22% compared with that in 2019. This is also the biggest recession crisis in the art market since the impact of the financial crisis in 2009. Geographically, the United States, Greater China and the UK continue to account for 82% of global sales in 2020, despite the decline in sales. Among them, the U.S. market maintains a leading position in the world, accounting for 42% of the sales volume by value. The Chinese art market suffered the most severe impact in the first quarter of 2020, but it recovered its growth momentum in the second half of 2020. The strong sales in the high-end auction market helped the Greater China region to finally keep level with the United Kingdom, and they were tied for the second place, accounting for 20% of the market share respectively.

When asked how the market environment under the epidemic crisis in 2020 is different from the decline in the art market under the financial crisis in 2009, Clare McAndrew summed up the differences in market supply and demand, wealth reserves and public mentality. "The impact of the financial crisis in 2009 on the art market was that people thought it was a very bad time to sell, so there was a shortage of supply in the art market and people were hesitant to sell art," she said. However, during the epidemic crisis in 2020, the wealth of high net worth groups who want to buy artworks will continue to grow. Some people want to sell artworks, with both supply and demand booming. However, there are few opportunities to trade in this year. " In addition, the wealth reserves of high net worth people in the two market depressions are also different. According to the Forbes list of global billionaires, the number of global billionaires dropped by 30% and their wealth decreased by 45% in 2009 under the influence of the global financial crisis; in 2020, the number of billionaires under the epidemic crisis increased by 7%, and their wealth increased by 32% year-on-year. Clare says behind the number of these billionaires is an individual, many of whom are very important collectors. "Unlike the previous financial crisis, high net worth people will have more money, time and interest to buy art works in 2020, but the overall sales volume will drop due to the decrease of sales opportunities." In addition, Dr. McAndrew also mentioned that during the two crises, people's attitudes towards the art market were very different. "In 2020, people will focus on health and social issues in life, but when people realize that they may coexist with crisis in the future, they will show an active support attitude towards galleries and artists in crisis, and they are interested in supporting art sales through new channels, which promotes the development of things in a positive direction. This was rare in 2009. "

Online booming, offline expectations gradually prosperous

Although the threat to the business survival of the art industry caused by the decline in the art market can not be comprehensively measured, 2020 also brings opportunities for restructuring and innovation within the industry, which many people believe will bring about continuous changes in the future market. The epidemic has brought external impact to the operation system of the market, and has brought about the upgrading of the industry. The most obvious example is the popularity of digital strategy and online sales.

Before 2020, online channel is an important means for dealers to establish contact with new buyers. With the expansion of global buyer group, the development of technology and the popularity of e-commerce, online sales of artworks have been growing slowly and steadily, but the growth rate has been lagging behind other industries. With the travel restrictions and offline activities suspended under the epidemic situation, traditional galleries and auction companies have greatly strengthened their digital strategies to maintain their liquidity; some art fairs have set up online reading rooms and expanded their sales channels with the help of various third-party platforms. Whether they can turn to online communication, exhibition and sales in time has changed for many galleries, art dealers, art fairs and auction houses It's a matter of life and death. According to the report, online sales of art and antiques reached $12.4 billion, and the overall share of online sales increased from 9% in 2019 to 25% in 2020, a new high.

Art dealers have been one of the most flexible players in the market in recent years, but the epidemic situation and uncertain environment have brought them great challenges. Although many dealers have maintained the operation and sales of the whole year, it is still hard to hide the decline in 2020 after a small increase of about 2% in 2019, and the overall market value of dealers has decreased by 20%. The impact of the crisis is unevenly distributed in the dealer industry, some dealers are facing the risk of bankruptcy, but some dealers have successfully maintained profits by reducing costs. For a long time, the phenomenon of "winner take all" often appears in the dealer industry, and the sales volume of dealers with large volume is also high. Therefore, many people worry that the epidemic is likely to aggravate the polarization in the industry. But the data shows that some large galleries or distributors will also have the biggest drop in sales in 2020. Therefore, in the face of changing consumer behavior and economic reality, dealers of all sizes need to re-examine their sales strategies and pay attention to the structural changes brought about by the epidemic.

The future of the Art Fair has become one of the most controversial topics in the art market due to the cancellation of most of the major sales activities such as the art fair in 2020. The special year of 2020 has exposed the problems of over intensive schedule, serious homogenization of activities, high infrastructure costs and high direct costs for small and medium-sized dealers in the past 20 years. Last year, some dealers reduced the frequency of participating in exhibitions, and only participated in exhibitions and promotion activities that can provide the best return. According to the data, 61% of exhibitions will be cancelled in 2020, but most of them (62%) provide digital versions of online reading rooms or art fairs. In the survey, about 48% of high net worth collectors are willing to participate in local or international art fairs in the first two quarters of 2021, up to 68% by the end of the third quarter, and more than 80% of collectors are willing to participate in the fourth quarter. Dr. McAndrew said: "I think the art fair market is bound to prosper again, and the most important part of enjoying the art market is to appreciate the works and communicate with people in person. But the overall recovery may not be so fast, 2021 may be a tough year, but after that we will see significant growth. "

In terms of auctions, public auction sales of art and antiques reached $17.6 billion in 2020, down 30% from $25.2 billion in 2019. This is the second year in a row that after two years of growth from 2016 to 2018, the total market value fell to the lowest level in 10 years in the art market. Although there are buyers who are willing to buy art, sellers generally believe that 2020 is not the best time to sell their works, according to the report. As a result, many sellers turned to auction houses to negotiate private transactions, resulting in a substantial increase in the share of private negotiations. According to statistics, the private sales volume in 2020 will exceed $3.2 billion, a significant increase of 36% compared with that in 2019. It is worth noting that China's reopening and resuming offline activities is faster than that of European and American countries. The Greater China region surpassed the United States as the world's largest auction market for the first time last year, accounting for 36% of the total public auction sales.

2021: Test and challenge coexist

"2021 will be a year full of experimentation, but I think experimentation is also a challenge," Dr. McAndrew predicted to 21st century economic reporter the possible new trends in the art market in 2021, based on the market situation of booming supply and demand in 2020 but suffering from no trading opportunities. In 2021, there will be a large number of local cooperative trading activities, while in 2022, it will gradually spread to the international level, and the sales rebound will be further revealed. "

The first quarter of 2021 has just begun, and the market situation has been "surging". In the past, digital art only accounted for a small part of the art, but the recent popularity of NFT works has stimulated many collectors' desire for digital art collection and aroused people's interest in digital creation. "People have been hesitant to buy and collect digital art, because they are worried that someone might copy the original art, or they don't know how to appreciate the value of the work or how to evaluate the ownership of the art. At present, the actual sales of NFT may be a little high, but we should continue to pay attention to this field and help collectors broaden their collections. " In addition, Dr. McAndrew predicts that the recovery of art market sales in the future may start with some local art fairs. "I think first of all, there will be some local art activities, which may be jointly organized by art dealers such as galleries. It's a little bit like a 'localized version' of the small art fair. There will be a lot of interesting cooperation at that time," she said. However, the recovery of art sales activities at the international level will not appear until the epidemic situation is controlled and travel restrictions in various countries are lifted. At present, it seems that it will take some time. "