As auction houses have been forced to cancel or postpone live auction sales, 1st in Asia, and then in Europe and the US, the have quickly turned to their online platforms, increasing the number and variety of sales, and they are doing a brisk business at it.
That’s because the switch to the virtual world has been in play for years. With offline options out of the picture for the moment amid the C-19 coronavirus chaos, what is new is how much material auction houses have been able to bring online, and how quickly they have been able to pivot by creating new, never-before-held sales, and in shifting traditionally live sales into the virtual world.
“We do not see this as a departure,” says the Vice Chairman of Sotheby’s fine art division, noting that the auction house has sold works online since Y 2016. The circumstances of the C-19 coronavirus event have “really allowed us to accelerate a program that was already in place, that we already were exploring.”
Christie’s Matthew Rubinger, deputy chief marketing officer, recalls recently seeing a cartoon that asked: “Who is driving digital innovation in your company? The CMO, CTO, CEO, or C-19.” The answer: C-19.
What that’s meant for Christie’s is that Rubinger, who is driving forward many of the digital initiatives at the auction house, such as virtual viewing rooms and augmented reality has “gotten more support for things we’ve wanted to push forward all along.”
Like most every business across the globe, the C-19 chaos has affected auction houses with closures, and in the case of Sotheby’s, according to reports, the furlough of about 12% of its employees. The remaining staff in the US and UK has had pay cuts of 20% through June.
Christie’s has reduced its use of consultants, outside contractors, and temporary staff, and 95% of senior executives, representing about 30% of its staff, agreed to pay cuts of between 10% and 20% for 4 months.
Phillips said it has taken advantage of government assistance where possible. It also has temporarily furloughed some UK employees and agreed to a 20% salary deferral for senior staff through July.
All the auction houses have ramped up their digital offerings, both in online-only auctions and private sales.
Online-only sales at Sotheby’s around the world, and across all its categories have totaled $80-M so far this year in nearly 50 sales, compared with $20-M in 30 sales in this same frame last year.
Christie’s expects to offer more than 80 online auctions in 1-H of the year through July, compared with 48 in the same frame last year.
Phillips said that its new accounts are up 127% this year over last, reflecting a phenom that officials at all the auction houses have reported. More than 50% the buyers at Phillips’ Desktop online auction that closed 24 April featuring the $154,300 sale of Eddie Martinez’ Bay City were new, said the head of online sales.
Global online sales of art and antiques throughout the art market, including private dealers, as well as auction houses, fell about 2% Y-Y to an estimate of about $5.9-B in Y 2019, according to the UBS and Art Basel Art Market Report 2020.
The report noted that online sales were more important for smaller auction houses last year, making up 23% of sales for those with sales under $1-M and only 4% of sales for houses with sales of more than $10-M.
Those figures are likely to shift in Y 2020, as the “crisis will certainly escalate trends that were already underway in the auction sector,” says Clare McAndrew at Arts Economics in Dundrum, Ireland, and author of the report. Like other industries that are “reliant on personal contact and trust,” auction houses “are seeing the digital disruption that has been forecast and pushed against for so long pretty much inescapable.”
Online approaches and tools, she says, are “moving from more experimental or complementary strategies to front and center survival tools for businesses.”
That is evident at Sotheby’s, where the auction house is diving into selling material at higher price bands. While this trend was underway before, the auction has “broken some new barriers in this time period.” Examples include the £1 million sale of George Condo’s Antipodal Reunion in its Contemporary Curated sale ending 21 April in London, and the $1.34-M sale of a Cartier Tutti Frutti bracelet in a dedicated sale ending 28 April.
Currently, the auction house is running its day sales of contemporary and impressionist and modern art online, in combined sales that could bring in an estimated $20-M. The sales, originally scheduled to be held during the major Spring auctions in New York, feature works in each category valued at above $1-M, and more than 60 works estimated above $100,000.
“I do think it will be an interesting bellwether for the market moving forward,” as “the biggest market indicator of where the contemporary and impressionist and modern art market stands since London in February. It definitely represents a new tier of online sales in terms of the price point and overall value,” Sotheby’s said.
The 2020 Art Market Report, for instance, showed only 8% of high-net-worth collectors had spent more than $1-M online, while 65% had not spent more than $50,000. Those figures are slightly higher than the prior year, demonstrating growing acceptance, which galleries, too, have been experiencing via online art sales so far this year.
Executives have noticed that bidders 33% of whom have been new to Sotheby’s during this period seem to be engaging with the online day sale differently than in the past. Instead of waiting until the last minute to bid, they are diving into lots without reserves a week before the sale closes.
“They know that they have to jump in and they are setting the value,” Sotheby’s says.
Although there is not a lot of data on purchasing behavior above $1-M online, Christie’s has found its clients who bid and buy at higher levels are engaging digitally. “There’s not a huge reason why they wouldn’t start interacting with our online-only sales,” it says. “We just need to make sure we take a thoughtful, strategic approach, and bring our clients along for the ride. There’s no reason for us to push too fast.”
“Collectors may buy online at the higher end when they have to, but would they choose to is another question entirely.”
One shift for Christie’s during this frame has been to offer viewing rooms so clients can “walk” through virtual galleries to see what a piece of art looks like on a wall. The technology is not new to the auction house, but it was not necessary when collectors could stop by their physical galleries. “We have rolled it out sooner, and we are better positioned to scale it as much as we need to,” Christie’s says.
At Phillips, one of the major shifts has been the creation of sales that draw in material across categories. So instead of simply holding a contemporary art sale online, the auction house has created themed sales that include art, design, and photography, such as it did with Bloom, a nature-themed auction that closed in London on 7 May.
“We’ve been able to be more creative with our ideas for sales,” Phillips says. “It is made for a really interesting, energetic, and iterative atmosphere.”
All the auction houses plan to open their doors in some format for live auctions beginning in New York at the end of June or in July. The hope is that the digital offerings the auction house has been able to deliver when offline auctions weren’t an option will be “supplementary” to their total sales for the year, since Sotheby’s plans to hold live auctions this Summer as well as this fall.
The fact that 33% of all bidders and buyers in this C-19 coronavirus frame have been new to Sotheby’s also should benefit the bottom line going forward.
Given the client acceptance and engagement Christie’s has seen with its online tools, and the strong results the auction house has experienced online, it expects the auction house’s digital presence will become more important, even as it resumes live auctions.
“We are certainly going to see a shift toward our business centering around our digital presence rather than our catalogs and exhibitions,” it says. Adding, “it is not one or the other”—live versus online—“we need to think carefully about the journey, and what the role of each of these things are.”
Have a healthy week, Keep the Faith!
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