Art Dealers and Galleries
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 4,400 art dealers, galleries, and auction houses in the US generate revenue by selling artwork or earning commissions from consignments. With a consignment sale, the dealer earns a commission based on a percentage of the purchase price. Auction houses earn commissions based on the hammer (sale) price. Primary-market dealers develop relationships with promising new artists and help establish a market for their work. Secondary-market dealers specialize in art for resale on behalf of collectors, institutions and estates.
Long Sales Cycle, Slow Moving Inventory
Art dealers and galleries often have significant investments in inventory, with no indications of a quick return.
Vulnerability to the Economy
Demand for art is sensitive to economic conditions, and drops during periods of uncertainty.
Industry size & Structure
The average art dealer operates out of a single location, employs 4 workers, and generates over $2 million annually.
- The art dealer, gallery, and auction industry consists of about 4,400 companies that employ about 18,800 workers and generate about $10 billion annually.
- The industry is concentrated; the top 20 firms account for 49% of sales.
- Large companies, which include the Gagosian Gallery, David Zwirner Gallery, and The Pace Gallery, generally have a limited number of locations (ten or less) and often have international operations. The industry includes auction houses, such as Sotheby's.
- Post-war and contemporary art accounts for 53% of global art trade, according to The Art Market report.
Industry Forecast
Art Dealers and Galleries Industry Growth
Recent Developments
Sep 23, 2024 - Services Sector Expands, Industry Employment Falls
- Economic activity in the services sector expanded for the fourth consecutive month in October 2024, according to the Services ISM Report on Business. The Services PMI registered 56% in October, up 1.1 percentage points from September. Fourteen of the 18 services industries reported growth in October including Retail Trade; Information; Transportation & Warehousing; and Accommodation & Food Services. Industries reporting a contraction in October were Other Services; and Management of Companies & Support Services. Fifteen of the 18 services industries reported an increase in prices paid during the month of October, including the Arts, Entertainment & Recreation; Retail Trade; and Wholesale Trade industries. Employment by art dealers declined 11.5% in September 2024 compared to a year ago, per the Bureau of Labor Statistics (BLS). Average wages at other miscellaneous retailers were 4% higher in September 2024 compared to a year ago, reaching $22.33 per hour, per the BLS.
- The art world is gearing up for a second Donald Trump presidency, after enduring several challenges during his first administration, according to several art publications. During his first administration, Trump called for the elimination of the National Endowment for the Arts in his 2018 and 2021 budgets and targeted the funding for other arts and cultural organizations, according to ART News. Another proposal during Trump’s first administration was to target Chinese art and antiquities with a 25-percent import tariff, according to ArtNet. Modifications to other regulations could also affect the art market. For example, a change made by the Trump administration in the 2018 Tax Cuts and Jobs Act eliminated a tax loophole for art collectors.
- Consumer confidence levels increased in October 2024, improving in all five components of the Consumer Confidence Index, according to The Conference Board. The index was 108.7 in October 2024 from 99.2 in September 2024. Dana Peterson, chief economist at The Conference Board, noted that confidence was the highest among those between the ages of 35 to 54 and those in the income category of over $100,000. Per Peterson, “Consumer confidence recorded the strongest monthly gain since March 2021, but still did not break free of the narrow range that has prevailed over the past two years.” Plans to purchase homes and new cars rose on a six-month average basis.
- Young wealthy Americans are interested in collecting art, according to a new survey from Bank of America reported in The Art Newspaper. The survey revealed that 83% of respondents aged 43 and younger currently own art or would like to, compared to 34% of respondents older than 43. Compared to older generations, millennial and Gen Z respondents were six times more likely to say they plan to take out loans against the art they inherited. Respondents with art collections worth more than $100,000 noted that they would be more interested in buying a valuable work of art in the next year instead of selling one. According to Drew Watson, head of Bank of America's art services, "That is reflective perhaps of the time that we're in right now, which is more of a buyer's market. The art market is really coming off of recalibrating and finding a new equilibrium off of the highs of 2022 after the pandemic recovery. There's some great buying opportunities in the market right now."
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