2. Dealers

After two years of growth and recovery, sales in the dealer sector slowed in 2023, with aggregate values estimated to have fallen by 3% year-on-year to just under $36.1 billion, and mixed performance between different segments of the market.

While the high end of the market was pivotal in driving sales upward since 2020, there was a distinct change in trend in 2023, with aggregate sales for the largest dealers showing a more significant decline than their smaller peers. Dealers with turnover of less than $500,000 had the largest increase in average sales (11%), while those at the top of the market with turnover of greater than $10 million saw averages decline by 7%. Many dealers at this level found that their sales were thinner at the top than in previous years, and buyers were more cautious about spending larger sums, unlike 2021 and 2022.

Just under half (49%) of dealers reported that their sales were higher in 2023 than in 2019 prior to the pandemic, 21% said they were at the same level, and 30% were lower. Despite not showing the strongest relative performance in 2023, the highest-turnover dealers were still much more likely to have seen an improvement in their sales over the longer period, with 72% of those in the $10 million-plus segment reporting an increase compared to 38% in the sub-$250,000 segment. They were also by far the most optimistic regarding sales in 2024, with over half (54%) expecting an increase and only 8% predicting a decline.

The average number of artists represented by dealers in the primary market increased to 23 in 2023 from 19 the previous year. For businesses operating in both the primary and secondary markets, the number was even higher at 39, up from 31 in 2022, as some galleries attempted to diversify their programs to generate sales and appeal to wider audiences in the flatter and more difficult market context. Despite the increase, there was evidence of more concentration of sales around top artists, with dealers reporting that one third of their sales in 2023 came from their single-highest-selling artist, up by 2% year-on-year, although still below the peak of 43% in 2019. The share from their top three artists also rose by 2% year-on-year to 53%.

As the market context was characterized by an elevated degree of uncertainty and risk aversion, sales continued to be anchored on the traditional mediums of paintings, sculptures, and works on paper, accounting for a combined 86% of dealer sales by value, up by 4% on 2022. While sales of digital, film, and video art saw a significant increase in share in previous years, sales in these mediums declined significantly in 2023, accounting for less than 1% of the total, down from 5% in 2022.

The issue of rising costs was a key challenge identified by dealers for the last two years, as rapidly escalating inflation continued to drive up operating expenses, including rent and payroll. In the face of slower sales and more variable demand in 2023, more businesses reported declining profitability, with 40% less profitable than they were in 2022 (up by 8% year-on-year), 31% around the same, and 29% more profitable (down by 10% versus 2022).

The average number of fairs dealers exhibited at was stable at four in 2023. However, the share of sales made at live events declined year-on-year, falling by 6% to 29% of total sales, higher than in 2021 (27%) but below pre-pandemic 2019 (42%). Dealers turning over more than $10 million reported the biggest drop in share year-on-year (from 40% in 2022 to 30% in 2023), while those in the middle market were more stable.

Looking ahead, 39% of dealers predicted that art fair sales would increase in 2024, down from 51% in 2022, with 14% expecting a decline. The largest dealers with turnover of greater than $10 million were the most optimistic, with 50% expecting higher art fair sales.

Transactions made in person through a gallery or dealers’ premises accounted for the largest share of sales by value in 2023 at 44%, down slightly on 2021 and 2022 (both 47%). Considering the period from 2019, before the pandemic, to the present, the biggest gain in share has been the shift back to direct sales by galleries: including sales made online or in-person, these have risen from 48% in 2019 to 64% in 2023.

Total online sales, including those made directly as well as through third parties, accounted for 23% of dealers’ total sales in 2023, up by 7% in share year-on-year and on par with 2021. The biggest growth has come from the increase in the share of sales through dealers’ own online channels and websites, which accounted for 20% in 2023, up from 12% in 2022.

Dealers sold to a larger number of buyers in 2023, with an increase from 57 in 2022 to an average of 83. The pandemic had limited dealers’ opportunities to reach new clients and the average number of individual buyers they sold to declined to 50 in 2021 from 64 in 2019. In 2022, the resumption of art fairs and a more regular schedule of events helped to expand this again, with a further uplift in 2023 to a five-year high. When asked about their greatest source of new buyers, art fairs were the most popular choice (30%), followed by walk-ins at the gallery (21%), underlining the importance of in-person viewing and communications for making sales.

When asked about the biggest challenges for their businesses in 2023 and beyond, the prevailing context of political and economic volatility and the effects this could have on demand was ranked highest by most dealers. Maintaining their relationships with existing collectors was the second highest, and was also identified as a key priority from 2020 through 2022. It is notable that while the maintenance of current relationships was key for dealers in 2023 and 2024, this became less of a priority when considering the longer-term, outpaced by the importance of widening their geographical reach in terms of new buyers. The costs of travelling to and participating in art fairs was ranked the third-biggest challenge for dealers in 2023 and 2024.