Here's how Covid has impacted galleries. The study by Art Basel and UBS

One-third of galleries that have reduced their staff, an average drop in sales of 36 percent (affecting mostly small galleries), growth in online sales (generating 37 percent of sales in 2020 compared to 10 percent in 2019), a drastic drop in fair sales (16 percent in 2020 compared to 46 percent in 2019), and 92 percent of collectors who still remained active in the market. One could summarize the impact of Covid-19 on the world’s galleries in these terms, according to The Impact of COVID-19 on the Gallery Sector study, sponsored by Art Basel, the world’s leading contemporary art fair, and the financial services company UBS. The study was conducted through a survey proposed to 920 galleries, 795 of which were surveyed for the purposes of the survey. Of these, 59% are located in Europe, 19% in North America, 10% in Asia, 6% in South America, 4% in Africa, and 2% in Oceania. As for the volume of business, 30% of the respondents have a turnover of less than $250,000, 27% between $1 and $5 million, 13% between $250 and $500,000, 12% between $500,000 and $1 million, 9% between $5 and $10 million, and a further 9% over $10 million. Of the surveyed galleries, 76% sell contemporary art only, 16% modern and contemporary, 5% modern only, and the remaining 3% contemporary art and other (e.g., antique art).

Let us look in detail at some of the data that emerged from the study. Nearly all galleries (93%) closed between January and July 1, which resulted in drops in turnover for almost everyone: the hardest hit were the medium-sized galleries (those billing between $250 and $500,000 had the worst decrease: -38%, with 55% holding steady and only 7% increasing turnover instead). On average, the decline was 33%, compared to an average of 61% of galleries that were unaffected and 6% that reported an increase in turnover. The drop averaged 36 percent (the hardest hit were still the establishments that billed between 250 and 500 thousand, with an average drop of 47 percent). The outlook, however, looks pretty good: 76 percent of all galleries think that by 2021 the situation will stabilize, about 9 percent believe there will be a return to earnings, and the remaining 15 percent think there will be further declines.

Covid has had a major impact on sales channels: in 2019, 40% of sales were made in the gallery, 27% at international fairs, 19% at local fairs, 7% on the website, and 3% still online but on third-party platforms. In 2020, the landscape has changed: rather stable for the main channel (down to 37%), while sharp reductions for fairs (9% international, 7% local) and big growth in online (29% from website, 8% from platforms). As for online, more than half of the buyers (55%) are new customers, 29% of them without previous contacts. Thus, it emerged from theos tudy that 72% of the galleries enhanced online content production, 69% social activities, 67% prepared viewing rooms, and 52% used the mail marketing tool. In contrast, only 21% focused on augmented reality.

As for trade shows, out of an average of 4 events scheduled for 2020, 2 were cancelled. As a result, as spending on trade shows plummeted (16% of total gallery purchases, down from 29% in 2019), investments were in other things, especially technology enhancement (spending at 10% versus 8% in 2019). There was, however, much propensity to save. To survive the crisis, galleries relied mostly on government grants from their countries (52%), revenue support measures (47%), reductions on rents (37%), tax suspension measures (29%), government loans (27%), and bank loans (14%). Only 8% cashed in through government purchases.

Covid has also caused galleries’ priorities to change: whereas previously the focus of gallery owners’ concerns was on fairs (for 79% of them), in-house exhibitions (62%), and expanding their geographic catchment area (57%), now at the top of the list are investments in online sales and exhibitions (76%), cost reduction (73%), and strengthening relationships with collectors who are already clients of the gallery (73%): interest in fairs, to give an idea, has plummeted to 20 percent. Interestingly, representation of artists’ gender diversity interests only 30% of gallery owners, and racial diversity 41% (it was 37% and 38%, respectively). For 2021-2022, this changes little: 68% of galleries want to continue investing in online, 61% want to expand geographically, and another 61% want to strengthen client relationships.

“The Covid-19 pandemic,” the study concludes, “has had and continues to have a negative impact on the art gallery industry. [...] Many gallery and dealer associations have predicted that a significant number of galleries will close permanently, particularly small businesses that were already at financial risk before the crisis. Galleries represent a particularly vulnerable industry in this pandemic because they are based on events, travel, and nonessential purchases. [...] Even before Covid, the gallery industry was a highly upwardly skewed market: companies selling in the highest sector of the market tended to show stronger growth than small and medium-sized galleries. Covid-19 and the ensuing economic crisis could intensify the polarized nature of this industry if it speeds the decline of small businesses and strengthens the position of businesses whose buyers and artists benefit from a greater degree of insulation from these cultural and economic traumas. That said, galleries at all levels are being forced to rethink their strategies, and success will depend on the health of corporate balance sheets, how resilient supply chains and relationships are, what forms of assistance are available, and how well they can adapt to changes in consumer behavior and new economic realities.” The Art Basel study can be freely downloaded from the fair’s website.

Here's how Covid has impacted galleries. The study by Art Basel and UBS

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