Friday, June 12, 2020

The Pandemic Recession: Likely Impact on Art Sales and Artists

In this post I'm beginning to set out an overview of what I think are key issues for artists during The Pandemic Recession. It includes some background reading and covers
  • the biggest drop in economic history since records began
  • the impact on art sales and artists
  • lessons for artists from the 2008 recession 

The biggest drop in economic growth since records began

Below is proof positive that we are very definitely going in a recession despite the fact we've not yet got to the actual point of being able to define a recession i.e. a recession is when growth in the economy falls for two quarters in succession. Technically this is when GDP falls for two three-month periods - or quarters - in a row. (NOTE: The recession will have a different profile in different countries. I tend to talk about the UK because that's where I live)

I know of no better way of persuading people that this recession is very serious than this trend line which was published by the Office for National Statistics (ONS) this morning (SEE GDP monthly estimate, UK: April 2020 if you want the full story). 
  • The trend line for UK GDP goes from January 1997 to the present. 
  • The little blip in the middle is the global banking crisis of 2008 and the aftermath. 
  • The big vertical line on the right is April - when UK GDP dropped by the biggest ever amount since records began.
There has been nothing like this ever before in economic history! That's how bad this is.  Note also it's bigger then the drop that the economic statisticians NOT employed by the government were predicting!

Source: Office for National Statistics – GDP monthly estimate

The impact on art sales and artists

The major implication for artists of the recession is going to be a BIG REDUCTION in available cash to spend on art - which makes selling art a major challenge i.e.
  • No matter what you do you cannot make people spend what they have decided to save - the biggest mistake any professional artist can make is to assume that somehow they have "the magic answer" or are uniquely exempt from either the recession or the constraints within the marketplace.
  • People throughout the economy will conserve their cash during a recession - because they don't know whether they will lose their jobs / businesses until we come out the other side of the recession. It's a very sensible strategy - for them. 
  • Demand for art - and sales of art - will drop significantly because
    • those who budget for art purchases will withhold or reduce the amount they spend on art. 
    • middle range buyers disappear - for a long time (this is what happened in 2008). Keep a very close eye on what sells at what prices.
    • impulse buys of lower priced art will reduce significantly on the front end of the recession and recover slowly
  • Avid art collectors devise means to keep collecting - within their budget
    • buyers substitute eg people switch to prints from paintings and/or buy smaller works - or rearrange all the art on their walls so it feels different until they feel like dipping their toe in the market again (guess what I did this week!)
    • overall initially lower priced art tends to sell better than middle range art (check out the The Artist Support Pledge with a ceiling of £200 - which has generated has generated an estimated £20 million for professional artists and makers across the globe)
  • Specialist genres with a major fan base do much better than generalists - but still typically experience a decline in income i.e. it's not the same for everybody
    • specialist art genres cope better because their fans are faithful - and artists already have a following
    • generalists tend to get hit hard i.e. those not known for anything in particular and who have no following. A "scattergun" approach to painting lots of different subjects does not create a following.
    • professionals with difficult subject matter have limited their market from the outset - and response to their art may be idiosyncratic
    • it's time for professional artists to review the type of art they create going forward
  • Art galleries will close (forever) - meaning fewer places to exhibit art when the recovery comes - leading to a longer recovery time for artists. Essentially this is because an awful lot of gallerists are people who lack business skills and don't consistently maintain an adequate reserve of working capital.  Check out the back stories of those who move over into art dealing at art fairs etc - if they couldn't manage the money last time, it's more than likely they won't be good at managing money going forward. 
The one exception to the gloom and doom is art sales at the very top end of the market - where art is typically bought and sold by people why people with extreme wealth who are, on the whole, resistant to recession fallout. However those reading this blog are typically not in that league so I will ignore that phenomena.

Lessons for artists from the 2008 Recession my view, artists are also most likely to avoid problems and/or achieve success if they are well-informed about the market they are operating in. Recognising problems that you might be facing is the first step to dealing with them. (Me - commenting back in 2008!)
Back in 2008, I wrote a number of posts writing posts about how artists can meet the challenges presented by the current state of the economy then. 

Some suggested I was being unnecessarily pessimistic at the time - but in the end that did not turn out to be the case. (I have a very good track record in "reading the runes"!)
  • Many of the blog posts are as relevant to day as they were then - albeit the circumstances are different
  • I'd suggest a bit of reading would do no harm - particularly for those artists who have zero experience of what it's like selling art in a recession.

ESSENTIAL READING What should artists do about marketing their art in a recession? (23 January 2008) 

  • talks about the effect of a recession on art
How does this all affect art?
Well anything which impacts on homes and stimuli for changes in decoration (like house buying and selling) and the amount of 'free' money which is around to spend on and invest in art is likely to have a very major impact on sales of artwork in 2008.
Plus, let's face it, at the end of the day unless you're involved in high end investment art, most of the art which is bought is actually purchased to decorate a home whether or not the artists who produce it would like it be called "decorative art". Which means both galleries and sales can be very vulnerable to economic shifts. It's just not the sort of thing which people buy when their financial status is uncomfortable or possibly under threat.
  • reviews a number of alternative strategies for artists trying to remain afloat and survive in this enormous sea of uncertainty
    • move upmarket
    • move out of galleries
    • get into direct selling
    • create opportunities for the risk averse to feel good
    • invest in effective marketing
    • manage your debt
  • PLUS lots of very helpful comments from artists discussing how the recession is affecting them and what they intend to do
While my galleries aren't "dumping" me, my work is being edged out by chance (closing galleries) or choice (customers opting for easy, affordable, decorative work).

What should artists do about marketing their art in a recession? - Part Two (3 April 2008)

  • a lot of this concerns the impact of a recession on the housing market and investments
  • plus some observations about how it all affects the art market towards the end
galleries serving the low/middle end of the market (ie £200+ prices) are finding the going tough and a number are 'shutting up shop'. 
One of the issues that is clear is that statistics for art markets are confusing as they tend to cover all market sectors - and it's very apparent that different sectors have different prices and different buyers - and the latter all experiencing very different situations at the present time.

Fine artists in decline in the USA? (3 July 2008)

For those starting out this analysis of the real economic/monetary dimensions of life as an artist is an education - even if the data is getting on for 20 years old. There's nothing to suggest life has changed much (although I will be on the lookout for latest research_.

So those planning a career in art at this stage - because you always did or because you lost your job - should have a proper read about the reality of being a professional fine artist - for the majority.

The art of economising - on art materials (22 July 2008)

This focuses on the spend side of the equation for artists
What does spending less mean for artists?
The one advantage of age is that you accumulate lots of experience to draw on when it comes to a recession. It comes from having survived times when you didn't have so much money and/or you went through a recession.....or two, or three! It's not very nice while it lasts but a bit of ingenuity can go a long way in terms of making life easier.
It considers actions you can take in relation to:

  • suppliers
  • media and supports
  • mats and frames
  • packaging and despatch
  • art books
  • trade-offs and co-operative action / trade skills/stock

Taking action after the bubble has burst (30 September 2008)

This talks about the site I created last time - which has since been retired - but which I shall resurrect on Art Business Info for Artists as a resource for those needing to understand what is going on, what the options are and what might be the best option for them

What happens to artists in a recession? (16 October 2008)

This considers what happens to art sales and artists in a recession from the perspectives of:
  • The Collector's point of view
Art may hold its value better as an investment than other commodities. On the other hand art may turn out to have been overpriced. It's debateable whether art has become the new gold - unless it's paintings by old masters.
  • The gallery and auction rooms perspective
Interest in buying has already fallen away at the lower end of the market. Galleries targeting the entry level and mid-market investors face a major challenge and for some the prospects are very bleak. (Artists are recommended to assess their galleries from the perspective of whether or not a gallery has a strategy for surviving the recession. Otherwise they may find their art behind locked doors which won't be opening for business again.)
  • The artist's perspective
Companies go bust but artists don't - they can continue to produce, so long as they produce good quality work, keep their costs under control and don't overprice their work 
Artists with extensive client lists will be in a stronger position to ride out the recession - while those without a client list won't be getting any repeat purchases.

Selling Art Online 

I also did a series of posts about Selling Art Online in early 2009 - but those need to be updated since so much has changed.

and finally......

something I found while writing about the recession last time. I think it's worth copying and hanging on your wall!

10 benefits of a recession

It causes you to get more creative.
It forces you to make the tough decisions.
It thins out the competition.
It makes you realize you can’t take anything for granted.
It reminds you that real wealth isn’t about the stuff you own.
It fosters out-of-the-box thinking.
It makes it easier to abandon business-as-usual.
It brings you back to the basics.
It accelerates change.
It causes you to be less wasteful. 
Howies Brainfood - 10 Benefits of a Recession

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