This study identifies and analyses challenges and opportunities of commercial art galleries in the German-speaking market following the Covid-19 pandemic. The sector has already been a challenging playing-field with a growing market division between big and small players, many of whom were financially dependent on art fair participations. Through Covid, many operations had to be shifted online, and the traditional reliance on personal meetings and relationships needed to be mitigated.
This thesis defines main changes to galleries’ business models and assesses the impact of Covid. Objectives further include evaluating business opportunities and trends such as regionality or sustainability. The aim is to bring clarity to the most recent developments from an academic perspective while also offering practical applicability for arts managers, specifically gallerists and art market consultants. This thesis contributes to the literature by filling a currently existing gap through assessing the impact of Covid on galleries and by presenting an analysis from a managerial perspective. To achieve the objectives, a combination of methods is used, synthesizing academic literature, quantitative market reports and qualitative interviews with sample gallerists.
Overall, the falling away of physical contacts has proven to be the core challenge for a sector heavily relying on personal relationships. Covid’s impact varied across gallery types (small, mid-size and large), depending on their cost management and on how reliant each type had been on fair participation. The general shift online offered more opportunities for smaller galleries and/or the lower-price range; crucial factors are branding, conversion and targeting newer, younger audiences. Generally, however, online sales offerings underperformed and the overall role of digitisation for galleries is overrated. With younger collectors being more accustomed to buying online, a certain generational shift is however likely to happen. In the near future, the combination between interpersonal trust and trust instilled through online branding will be a decisive factor for winning newer collectors. Trends such as regionality or sustainability are unlikely to play a stronger part in the gallery sector.
Table of Contents
Chapter 1: Introduction and Research Question
1.1 Research Question: How will the Gallery Sector Develop?
1.2 Objectives: Assessing the Current Situation and Evaluating Trends
1.3. Hypotheses: Increasing Competition, Importance of Brand Value, and an Overestimation of the Digital
1.4. Literature Review: Understanding the Status Quo
1.4.1 Galleries’ Position within the Creative Industries
1.4.2 How Galleries do Business
1.4.3 Key Dynamics Relevant for Galleries’ Operations
1.4.4 Impacts of Covid: First Prognoses
1.4.5 Market Influences and Trends
1.4.6 Open Questions not Covered by Current Literature
1.5 Methodology: Combining Methods to Achieve a Full Picture
Chapter 2: Identification of Challenges and Opportunities
2.1 General Recession
2.2 Areas that were Especially Affected
2.3 Current Challenges and their Meaning for Galleries
2.4 Current Opportunities and their Meaning for Galleries
Chapter 3: Discussion of Developments and Potential Future Strategies
3.1 Business Models: The Lasting, but Minor Role of the Digital
3.2 Evaluation of the Online Space: Gallerist Perspective
3.3 Evaluation of the Online Space: Client Perspective
3.4 Evaluation of Trends and Expectations for Wider Sectoral Developments
3.5 Depiction of Market Division Correct yet Misrepresenting Galleries’ Operational Needs
3.6 The Art Fair Dilemma as a Main Operational Challenge for Small and Mid-size Galleries
3.7 Conclusion: Overvaluation of the Digital
Objectives & Research Focus
This thesis aims to analyze the impact of the Covid-19 pandemic on commercial art galleries in the German-speaking market, specifically investigating how these businesses navigated the loss of traditional sales channels, adapted their operational models, and positioned themselves for future recovery.
- Analysis of the financial and structural impact of Covid-19 on various gallery sizes.
- Evaluation of the transition to digital platforms and their effectiveness for art sales.
- Assessment of current market trends including branding, regionality, and sustainability.
- Investigation of the dependency on art fairs and potential alternative operational strategies.
- Comparison of qualitative interview data with quantitative market report statistics.
Excerpt from the Book
1.1 Research Question: How will the Gallery Sector Develop?
The commercial art gallery sector has already been a challenging playing field before Covid, both in Germany and globally. Internationally, the sector has seen a growing market division between a few big galleries and many small ones – for example, the global mega-gallery Gagosian makes more annual revenue than the entire German gallery market (cf. BVDG 2020, p.6), which in itself entails a dichotomy between big and small galleries. While big galleries enjoy the largest market share, the other end of the spectrum – 30% of total galleries – actually operate at a loss (cf. Resch 2016b, p.11).
The German market reflects the global dynamics, with 5% of its galleries accounting for 50% of revenue, whereas the bottom 60% only make up 7% of the annual national revenue (cf. IFSE 2020, p.16). Over the last decades, this gap was strongly reinforced by art fairs, which pose high costs and have great significance for galleries’ income: art fair sales account for 45% of galleries’ annual sales globally (cf. Art Basel 2020, p.20) and form their largest annual expenditure at 23% (ibid., p.23), leaving many heavily reliant on them. Covid not only prevented fairs but also resulted in reduced physical contact between buyers and sellers, rapid digitisation, and increasing competition. Many galleries have been struggling to stay afloat, since most of their traditional ways of finding and interacting with clients were not possible. This challenged existing operations; the crisis was also an impulse for new opportunities.
Galleries had to adapt to the falling away of fairs and find new ways of generating income and visibility. Some adaptations were made simply to persevere during the pandemic, other innovations might stay.
Summary of Chapters
Chapter 1: Introduction and Research Question: Establishes the research context by identifying the market’s pre-pandemic structural imbalances, defining the thesis objectives, and outlining the mixed-method research methodology.
Chapter 2: Identification of Challenges and Opportunities: Examines the immediate impact of the pandemic, highlighting the economic recession and the shift in cost structures, particularly the reduced dependency on expensive art fairs.
Chapter 3: Discussion of Developments and Potential Future Strategies: Discusses the long-term effectiveness of digital strategies, provides a perspective on current industry trends, and concludes with an assessment of the market’s potential future trajectory.
Keywords
Commercial Art Galleries, Covid-19, Art Market, Digital Transformation, Business Models, Branding, Art Fairs, Market Division, Client Relationships, Sustainability, Regionality, Qualitative Research, Gallery Management, Contemporary Art, Economic Impact
Frequently Asked Questions
What is the primary focus of this thesis?
The thesis investigates the challenges and opportunities faced by commercial art galleries in the German-speaking market in the aftermath of the Covid-19 pandemic, focusing on business model shifts and operational resilience.
What are the core research themes?
The core themes include the impact of market division, the efficacy of digital sales channels, the evolving importance of branding, and the critical role of maintaining long-standing interpersonal client relationships.
What is the research question addressed?
The primary research question is how the gallery sector is likely to develop in the wake of the pandemic, specifically regarding business sustainability and structural adaptation.
Which scientific methods are utilized?
The study employs a mixed-method approach, synthesizing academic literature, quantitative industry market reports, and qualitative semi-structured interviews with five selected gallery owners/directors.
What content is covered in the main section?
The main section covers the identification of economic challenges during the recession, evaluations of the "online space" from both gallerist and client perspectives, and a critical discussion of future trends like regionality and digitalization.
Which keywords characterize this research?
The research is characterized by terms such as art market developments, digital transformation, business model innovation, gallery management, and client relationship building.
Why does the author consider digitalization in the art sector to be overvalued?
The author argues that while digital tools were essential for survival during lockdowns, interviewees reported low conversion rates into actual sales, suggesting that the "digital boom" may not represent a long-term core shift for the sector.
What is the "Art Fair Dilemma" mentioned in the research?
It refers to the unsustainable reliance on expensive physical art fairs for reputation building and sales, which poses significant financial risks, especially for small and mid-sized galleries.
How do gallerists feel about the current market division?
Contrary to external academic depictions that view the gap between small and large galleries as a crisis of inequality, the interviewed gallerists generally view this division as a logistical reality of managing infrastructure, services, and overheads.
What is the significance of the "serendipity phenomenon" in this study?
It describes the crucial, non-measurable social value of physical events where new connections are formed by chance, a key element that the author finds currently irreplicable in digital, algorithm-driven art platforms.
- Quote paper
- Simon Braun (Author), 2021, Current Art Market Developments in the Wake of Covid-19, Munich, GRIN Verlag, https://www.grin.com/document/1181592
