ARTBASEL 2020: the impact of Covid-19 on art galleries

There is a post-lockdown world, but not yet a post-coronavirus one.
It is a world in which Covid-19 has changed the way of understanding the universe of art forever: exhibitions, fairs and art galleries have been forced to close their doors and rethink their future in the short and long term.
Today, we look at ARTBASEL's report, The ArtMarket Report 2020 on the impact of the coronavirus on art galleries. We also analyze the orientation that this specialized sector is taking to face a moment as complex and transformative as the one we are experiencing.

You average about art galleries in 2020

Some digital media, such as Europapress, La Ser or El Cultural among others, echoed during the month of March 2020 a devastating fact for Spanish art galleries:

It turns out that 87.5% of galleries registered losses during Madrid's fair season in February this year. And we are talking about fairs as gigantic as ARCO, Art Madrid or Hybrid. Only 12.5% of the galleries managed to maintain the same profit margin as previous editions with regard to the sale of works of art, which puts an average loss for the guild at 51.36%, a frightening number. Translated, the deficit is € 25,705.63.

This means that artists and emerging galleries, but also established ones, are trying to break out of a crisis of great global magnitude. The future of contemporary art is uncertain at the moment although this does not mean that practical solutions are being stopped since, as we will see later, the sector is very active in formulating solutions.

ARTBASEL and UBS Global: The ArtMarket Report 2020

ARTBASEL and UBS Global conducted a mid-year survey on “The Impact of Covid-19 on the Gallery Industry” in The ArtMarket Report 2020. Led by the prestigious Dr. Clare McAndrew, cultural economist and founder of Arts Economics, provided a comprehensive analysis of the current state of galleries in the art market.

The Art Market Report 2020 consists of a study as a macro-report of the current global art market, which annually studies the sale of works offline and online, the latest market trends and the establishment of statistics at an international level.

It is a completely independent and objective study, as ARTBASEL refers, in which different segments of the art market are observed (fairs, galleries, auction houses, changes in global wealth patterns, etc.) and their economic impact.
Clare McAndrew, studying the first few months of 2020, produced a series of results based on a survey of high heritage art collectors.

As far as collectors are concerned, the analysis particularly affects how Covid-19 has changed the way they interact with galleries, focusing on the world's most important art markets: US, UK and China.

Key data from The ArtMarket Report 2020

The report begins with a very revealing clarification of the current situation: “The art market has often been resilient to events in the economic and political environment (...) however, the unpredictable world created in the first six months of 2020 has presented the market with and to art galleries in particular some of their biggest challenges to date”.

With this prelude, the information accompanied by graphics that ARTBASEL makes available do nothing more than corroborate what in the end is a reality that we have intuited: many art galleries had to adjust their staff, permanently dismissing their staff in response to desperate to the growing Covid-19 crisis. One-third of surveyed galleries reduced their headcount in the first third of 2020. Galleries earning between $250,000 and $500,000 annually with an average of five employees reported the most reductions, at 38%.

Comparing the first six months of 2020 with those of 2019, art galleries report that their sales are down an average of 36%, with a slight drop of 43%.
And as we indicated in the previous paragraph, smaller galleries, which make around $500,000 a year, are the ones that have reported the biggest drop in sales.

With regard to online sales, if the participation of galleries increased by 10% in 2019, in the first quarter of 2020 it increased by 37%. In line with this, the galleries with the highest revenues, those with annual revenues of more than 10 million dollars, were the ones that showed the greatest growth.
In other words, the big galleries are surviving better than the small ones.

The cancellation of art fairs and its impact on galleries

We know that the connection between galleries and art fairs is close, as this is how they feed themselves to survive in the market.

The cancellation of art fairs in 2020 meant, once again, a hard blow to gallery sales: in the first half of 2020 they fell to 16% against the 46% that reached the same dates in 2019. In this climate, 91% of galleries predicted that art fair sales would not improve in the second half of 2020. Only a third believe it will improve in 2021.

Some positive data from collectors

Regardless, the report also clarified that collectors maintained their positivism when it comes to investing in art: 92% remained active in the art market during the first half of 2020.

Of the total respondents, ARTBASEL reports that 75% bought works of art through contact with galleries in 2020, with 40% concentrated in galleries where they bought previously, somehow guaranteeing the feeling of security.

Only 14% of collectors have been actively looking for new galleries for sale, but the former percentages, compared to the sum, are not to be sniffed at.

Looking ahead, most galleries expect sales to continue to decline; only 21% of those interviewed by ARTBASEL believe that there will be a resumption of sales in the second half of the year.

With the continuous restrictions on travel and events due to the states of confinement in its different phases, 82% of collectors were predisposed in the first half of 2020 to continue buying art, participating in fairs, exhibitions and events during the next 12 months. And that's not all: around 57% expect to attend these venues, both locally and abroad.

The future of art galleries

Undoubtedly, the future of art galleries involves maintaining the trust of collectors. But also for offering new virtual experiences and focusing on the possibilities of the online world:

This is how Hauser & Wright inaugurated its first virtual reality exhibition, scheduled to open in 2021, or how virtual art galleries such as Singulart, Galeriabat, Kreislerart or Bygart proliferated, among many others.
Hope is in 2021, but also here, on the holy Internet.