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 16,500 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 54% of global art trade, according to The Art Market report.
Industry Forecast
Art Dealers and Galleries Industry Growth
Recent Developments
Mar 12, 2024 - Employment Down, Wages Up
- According to the Bureau of Labor Statistics (BLS), employment by art dealers fell by nearly 3% in December 2023 over December 2022, reaching its lowest point in Q4 2023. Employment in the industry still has not reached its pre-pandemic levels. Wages at other miscellaneous retailers, which includes art dealers, was up 2.3% in December 2023 from 2022 and 25.6% from 2019, as companies compete for workers in a tight labor market. Additionally, consumer spending levels grew in the last half of 2023, a 3.1% increase in the third quarter and 2.8% in the fourth quarter, according to Reuters.
- Consumer confidence levels fell in February 2024 after increasing for three consecutive months, according to data from The Conference Board. The Conference Board’s consumer confidence index fell to 106.7 in February 2024 from 110.9 in January 2024. According to Dana Peterson, Chief Economist at The Conference Board, “The decline in consumer confidence in February interrupted a three-month rise, reflecting persistent uncertainty about the US economy. The drop in confidence was broad-based, affecting all income groups except households earning less than $15,000 and those earning more than $125,000.” Peterson added that the decline in consumer confidence was largest in householders over 55 and those under 35. Plans to purchase homes, autos, and large appliances decreased slightly on a six-month basis.
- Art collectors listed fraud, forgery, and provenance concerns as the top risks to their collections, according to a recent report by Chubb Insurance in ARTNews.com. In the report, Chubb surveyed 800 collectors in North America about their assets, collections, and concerns. Nearly 40% of collectors considered the items they collected as investments. Collectors were most concerned about art fraud (87%), damage during travel/transportation (86%), natural deterioration (79%), environmental damage (78%), theft/loss (77%), loss/damage from fire (74%), loss/damage from storms/floods (64%), loss/damage from internal water leaks/plumbing issues, and accidents caused by children, pets, and guests (59%, 45%, and 45%, respectively). Insurance companies typically do not offer protection for artworks that were later discovered to be fake or stolen. Art dealers and galleries may want to review the guarantees provided to art buyers regarding the authenticity of the work being acquired and work to develop a relationship of trust with customers.
- Inflation was reported as the top business problem for small business owners, selected by 23% of owners in a survey by the National Federation of Independent Business (NFIB). The NFIB’s Small Business Optimism Index fell in February 2024 to 89.4, marking the 26th consecutive month below the 50-year average of 98. According to NFIB Chief Economist Bill Dunkelberg, “While inflation pressures have eased since peaking in 2021, small business owners are still managing the elevated costs of higher prices and interest rates. The labor market has also eased slightly as small business owners are having an easier time attracting and retaining employees.” Small business owners are still encountering high job opening levels, with a seasonally adjusted 37% of owners reporting job openings they could not fill in the current period. Nearly 55% of owners reported making capital outlays in the past six months, with 35% spending on new equipment, 23% acquiring vehicles, and 15% improving or expanding facilities.
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