Brian Boucher talks to the gallerists reinventing a notoriously traditional sector

A ‘flight to quality’? The secondary market has had to change with the pandemic – and there might be no way back 

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When analyzing the art market, reporters are sometimes guilty of relying mainly on two parts of the trade for their data: major international galleries that sell works by name-brand artists for top prices, and trendsetting young artists whose works hammer for multiples of their auction estimates. This can result in a skewed picture, since it focuses not only on the extremes but also on just one sector of the dealer market.Along with mega-galleries and up-and-coming artists, a crucial engine that keeps the market humming is a healthy trade in secondary-market works of art. Dealers in this sector range from those selling pieces like Abstract Expressionist masterworks for tens of millions of dollars to many small galleries dealing in far more modestly priced works. Dr. Clare McAndrew, founder of Arts Economics, points out in <a href="https://artbasel.com/discover/the-art-market/overview">The Art Basel and UBS Global Art Market Report&nbsp;for 2020</a> that some features of the secondary market in art make this industry distinct from other trades: ‘A unique feature of the art trade is that the secondary, or resale, market dominates values, with the highest value of trade taking place between former and future consumers and their intermediaries, rather than between producers and consumers.’ Though not always, secondary-market artists are often more established, which can mean higher price tags, and are more often deceased, which can drive up value due to scarcity. Many gallerists work in both parts of the market; according to McAndrew’s survey, more than one-third (37%) work across both primary and secondary markets, while just over half (55%) work solely in the primary market. Only 8% deal exclusively in resale.We spoke to four galleries on three continents who trade in part or exclusively on the secondary market to learn how they are adapting to the new pandemic-era reality and what they see on the horizon for themselves and their peers.

Isabel Mignoni, director of&nbsp;<a href="https://www.artbasel.com/catalog/gallery/1111/Galer%C3%ADa-Elvira-González" target="_blank">Galería Elvira González</a> (Madrid), is a vocal advocate for her colleagues: about 60% of the gallery’s business is in resale. The secondary market is not made up of only the Lévy Gorvys and Acquavellas of the world, whose multimillion-dollar art-fair sales make headlines, she stresses. ‘There are many galleries throughout Europe that have one or two employees and sell wonderful, important secondary-market works,’ she says. ‘They don’t show up in the newspaper, but they do very good business and have expertise, which I value more and more.’Along with the rest of the artworld, these galleries have quickly adapted to a more virtual sphere during the pandemic, if not at the same level as the more cutting-edge, digitally savvy&nbsp;gallerists, many of whom deal principally in contemporary art. They have revamped their websites and taken advantage of art-fair online viewing rooms (OVRs). They have also begun to buy and sell artworks solely via JPEGs and other digital assets like never before – even if they haven’t exactly leapt into <a href="https://artbasel.com/stories/nft-revolution-koenig-mennour-pace-ora-ora">selling NFT artworks</a>, accepting cryptocurrency as payment, or employing blockchain technology (yet).

<a href="https://www.artbasel.com/catalog/gallery/1454/Tokyo-Gallery-BTAP" target="_blank">Tokyo Gallery&nbsp;+&nbsp;BTAP</a> (Tokyo, Beijing), recently overhauled its website with views of its exhibitions and high-definition images of artworks, which has led to more inquiries. All the same, laments the gallery’s director Hiroyuki Sasaki, ‘the digital artworld is evolving every day, and it’s not easy to constantly be at the front.’ (But, Sasaki points out, Japanese gallerists are investigating the possibilities of blockchain, and the Contemporary Art Dealers Association Nippon is studying NFTs.) Mignoni reports that, by chance, her gallery had redesigned its website just before COVID-19 arrived and made further advances during lockdown. For example, she says, ‘We never used to do videos about our paintings.’ But the rich information that videos can provide has been illuminating for collectors who previously would only have considered buying a work they had seen in the flesh. There may be no looking back.&nbsp;‘It’s highly unlikely that the secondary art market will return to “normalcy”,’ says Bo Young Song, managing director of&nbsp;<a href="https://www.artbasel.com/catalog/gallery/12716/Kukje-Gallery" target="_blank">Kukje Gallery</a> (Seoul, Busan), whose business is about one-fifth secondary market. ‘The coining of the widely used term “post-COVID” already connotes the fact that the world will not return to the way it was before the pandemic. Pre-COVID-19, we were able to introduce secondary works only at art fairs. The rise of the pandemic has enabled us to break free from this shell and actively use OVRs and other online platforms for the growing virtual portion of our program.’

Thomas B. Parker, associate director of&nbsp;<a href="https://www.artbasel.com/catalog/gallery/1156/Hirschl-Adler-Modern" target="_blank">Hirschl &amp; Adler Galleries</a> (New York City), says that out of necessity the gallery will continue to take advantage of the digital platforms that art fairs as well as companies such as Artsy, 1st Dibs, and Artnet offer. ‘It’s a very crowded market, and the only way to be seen is digital,’ he acknowledges. (Hirschl &amp; Adler’s business is entirely secondary market, but its partner gallery, Hirschl &amp; Adler Modern, is almost entirely primary.) At the same time, he says, since fairs and other companies have built such extensive and visible platforms, ‘we don’t have to invent an elaborate online presence for our business.’ What’s more, gallerists note that they aren’t the only ones transformed by the growth in digital business during the pandemic. Their collectors, some of whom tend to be members of older generations, have also changed their ways.‘The drastic changes we’ve seen during this past year and a half have also encouraged our clients to become more open to relying on online communication to view and discuss the works we offer,’ says Song. Half a world away, Mignoni makes a similar observation. ‘A lot of our collectors are not very young and not into the digital thing,’ she says. ‘You send them a digital invitation, at first they are reluctant, or they have to ask for assistance. But they soon realize that it’s easily accessible. Then we can have a long conversation via Zoom, which is totally new for them and for me as well. It has opened a new door.’

Gallerists in far-flung parts of the world are adapting to new technologies in different ways, whether because of varying levels of existing digital infrastructure or differing needs. Song, for example, is hopeful that blockchain technology might strike back at the plague of forgeries in a part of the world that has a short history of producing catalogues raisonnés. Parker, meanwhile, looks at blockchain with a touch of hesitation. When it comes to registrarial functions, he says, ‘We have a physical record. We have cards that get filled out for every work we’ve ever handled, and we still make a card for everything that comes through here.’ Although he describes Hirschl &amp; Adler as being the antithesis of blockchain, he is quick to add that he is not a total skeptic: ‘It’s certainly a phenomenon, but you have to be careful about being drawn to such phenomena. They can be used carefully or cleverly. Some people will make out well. I don’t think we’re going to be one of them.’ Vaccines are increasingly allowing societies to open up, and the art market is approaching a more normal future (whatever that might look like), but what is going to happen next in this crucial sector of the market? Gallerists are of different minds about what it will or should be – or, at least, what suits them best. First of all, Mignoni insists that art fairs will continue to truly depend on the secondary market. ‘The primary market is shiny and has great allure,’ she admits. ‘I understand that there are some collectors who know about&nbsp;<a href="https://www.artbasel.com/catalog/artist/6906/KAWS" target="_blank">Kaws</a> but not&nbsp;<a href="https://www.artbasel.com/catalog/artist/7356/Marcel-Duchamp" target="_blank">Duchamp</a>. But fairs need secondary-market galleries dealing in important historical works if they want even those collectors to know the market is strong and reliable and weighty.’

Some of these gallerists say they have been changed forever by the pandemic era, but not all of them. On the one hand, there is Song’s attitude. ‘Kukje Gallery is on board to develop novel business strategies that will address the needs and concerns of the new climate that will come,’ she says. ‘In addition to fortifying our online presence and opening our renovated K1 building as a multiuse arts complex – fully equipped with a café, restaurant, and a wellness center in order to heal the body and spirit – we will remain committed to designing both in-person and virtual routes of communication that will foster a stronger sense of community within the artworld.’On the other hand, Sasaki, her near neighbor at Tokyo Gallery&nbsp;+&nbsp;BTAP, doesn’t hesitate to say, ‘I think that we will return to our previous business model.’To a degree, Parker strikes a mixed note, acknowledging that digital is now indispensable but stressing that nothing will ever replace the in-person encounter with art: ‘Our clients do want to return to seeing works in person. That would be a welcome shift for us.’Moreover, a mania for the newest thing might, too, be waning, Parker continues. ‘In the old days, let’s say 15 or 20 years ago, there was a phrase – “flight to quality.” It refers to a return to proven artists and markets,’ he says. ‘For the past decade, I hadn’t heard it at all. But I heard it from a client this spring.’ Rich veins of great secondary-market material can be tapped, he points out, for the sky-high price of a single trendy contemporary artist at auction. In turbulent times, collectors are often drawn to what are considered safer assets. Parker senses a good deal of pent-up demand in the market, and he and his colleagues may be better equipped, now that they have caught up with technological advances, to take advantage of that. Click <a href="https://www.artbasel.com/about/initiatives/the-art-market">here</a> to download The Art Basel and UBS Global Art Market Report free of charge.Top image: installation view of Ha Chong-Hyun's solo exhibition, Kukje Gallery, Busan, 2019. Courtesy of Kukje Gallery, Seoul and Busan.

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Brian Boucher talks to the gallerists reinventing a notoriously traditional sector

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A ‘flight to quality’? The secondary market has had to change with the pandemic – and there might be no way back

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