The Seminal Year of 2011
December 23rd, 2011 by admin
As this year draws to an end I can’t help but look back over the last decade, and realize how my business and its industry have evolved. Ten years ago we lived in an emerging internet world, and the start of the decline in the traditional decorative arts. A decade or so before, when the Japanese art speculation bubble burst, decorative arts were considered rock solid. Are period decorative arts really and finally getting rediscovered, and how will the industry make adjustments to continue to grow?
For me my first seminal experience in the industry was a decade ago, in 2001. It was the year I completed the purchase of my company, and the trauma of 9/11 happening within 2 weeks. Oh, and I forgot that the Sotheby’s/Christie’s Duopoly was running at full tilt, despite their Federal government convictions. This was a period that marked the greatest decline in dealers participating in the industry. The final nail in the coffin was the domination of the Mid-Century Modern style of minimalism, sparseness, and white walls which caught a tidal wave of public acceptance. However, the challenges of the last decade will make the next one more intriguing.
As a generally accepted requirement in the trade, to survive and be successful entails just one thing, and that is to sell. Some kind of turnover is better than none. The revenue model of the auctioneer is build strictly on turnover, with the caveat that you don’t have to own it to make money. That is a difficult concept for dealers who put their money in their inventory and then hope for the best. Also, auction liquidation and purchasing, even at Sotheby’s and Christie’s is not what it was years ago either.
With the shrinkage of dealers, those that have survived learned to live without having auctioneers as their source for merchandise. For dealers, the best opportunity to source inventory is structuring the consignment concept more to a seller’s needs with less capital required. All a consignment requires is control to sell and physically show the item. The more inventory one has, the greater the prospects to sell. This will be a necessary method for dealers to compete with the auctioneers for inventory in the future.
But now the new great threat to dealers is auctioneers turning into dealers. The new Christie’s Chairman Steven Murphy is quoted in the December 2011 edition of The Art Newspaper as stating “I expect it (private sales) will double and then double again…because it’s what our clients want.” Only the strongest and most creative dealers will survive that kind of intrusion in their method of doing business.
With an uncertain future, we at Newel are now looking forward to finding opportunities to grow the company. We have renovated our showroom and building to better display and creatively use the space while also preparing to showcase a new website and backend database. To complete both goals of a building renovation and implement state of the art technology should set us on a new and exciting path to seize new challenges and possibilities. Looking into the future, those accomplishments will hopefully feel seminal.
The (Diversified) Mega-Dealer
November 8th, 2011 by admin
I had some “old” dealer friends email me that I hadn’t written a blog in a while. I hate to make excuses, but there is a major project underway at Newel that took my focus away from writing (there were plenty of times I wished I could have written something). This industry is potentially far stronger than how it has evolved under the methods of deception and conflicts of interest perpetrated by the Sotheby’s/Christie’s auctioneer duopoly. Their business model is built on a real house of cards.
The only effective way to really change this industry from the auction centric thinking is to do what they do, but better. Basically, they live off of consignments and for practical purposes they are the choice of death, divorce, or taxes. They squeeze the consigner and stiff the buyer with a buyer’s premium. That, alone, should motivate buyers and sellers to look for a dealer.
The historical problems dealers have had are the abilities to warehouse, display, and finance inventory. None of the three is easy to do. Most antiques and art dealers also operate with a limited field of focus. Whether art is Modern, Impressionist, or Old Masters, few art dealers can claim to stock all three to buy and sell. With the decorative arts, the disparity in styles is even more pronounced. How many antiques dealers can mix French Art Deco and American Rustic or 18th Century English with Art Nouveau? But think what kind of dealer could offer both decorative and fine arts, together.
Space and drama in presentation is the name of the game. That is what art and antiques show attempt to do for dealers. Both the auctioneers and shows exhibit for no more than a week and then it’s all gone. Sold! Who knows?
The real trick for dealers is to capitalize on the consignment opportunities. Warehousing is a major issue, but if you’ve ever seen a Sotheby’s or Christie’s warehouse, it can be done. Turnover is a key element for profit, but not necessary storage overhead, which remains pretty fixed. The requirement for auction turnover has additional expenses of moving and manpower that are not required for a more static inventory. So where are those consignment opportunities? They abound.
Just mention Sotheby’s and Christie’s to anyone today, and they really don’t have much nice to say. It’s not that the individuals who work there are bad, they just don’t have any other option. They are all good Company people, but they don’t work for either the consignor or buyer. That is the best reason why dealers should succeed.
My idea of a Mega-Dealer is seen through by what we have accomplished in our newly renovated showroom. Seeing decorative antiques of all periods and style mixed with Contemporary artists of any form is exciting. Displaying a mixture all period art forms can be done anywhere. You just need professional managers (dealers) to run an operation that works better with buyers and sellers.
The New York Times vs 1st Dibs
September 12th, 2011 by admin
So much for the New York Times being an elitist paper, as Steven Kurutz writes of buying antiques on 1st Dib for an article in last Thursday’s Home section. The writer reveals his ignorance of values with the excuse of having a beer budget. Excuse me, but good luck finding a Picasso on Craig’s List. Understanding how a marketplace works would be a good start and having a site where dealers post prices is a lot better than auctions, where you have to be duped into finding where the price to buy starts.
I find that articles like Kurutz’s have a negative point of view about pricing for these objects. The fact that he must acknowledge 1st Dibs is an admission of his lack of resources to find these “expensive” items. The public in general feeds off this public humiliation of dealers and their pricing, but what are the alternative sources that he offers; eBay, Craig’s List, VandM? Sorry, but Mid-century is already cheap, available, and been recycled to death. He should be able to do better with a very predictable “in” period of decorating.
Let us see what Mr. Kurutz can do about finding good 17th, 18th, and 19th Century items cheaply, and where. Perhaps this assignment is a bit more difficult and the market more sophisticated for his amateur skills. Buying good fine and decorative arts is not a game for someone lacking knowledge and a passion. There are differences in every originally designed and created object that cannot be defined only by a price. The pleasure of ownership is measured by rarity and a perceived value that is affordable. Not everyone can buy a Mercedes, but a lot more appreciate its status and comforts. That 3 bedroom coop with a terrace on Park Avenue won’t come cheap.
With all these items, the sticker price is what someone posts as an offering selling price. You negotiate for a car or home, what is so different about fine and decorative arts? The public’s fear of pricing is exacerbated by articles like what Mr. Kurutz has written. Yet he fails to take aim at the other great resource for merchandise, the auctions. Maybe he should experience the thrill of trying to buy a good piece in that venue. Maybe he will experience a good buy, only to be saddled with a hefty buyer’s premium.
Finally the future for my industry won’t hinge on getting the best possible deal or buying cheaper than on 1st Dibs. The need for a public not to fear owning these items is the tendency I wish to see. Understanding and appreciation of the object is the paramount goal of any industry’s ability to succeed. Apple has done that brilliantly. Dumbing down to cheaper considerations is a formula for never attaining a higher goal. Perhaps Mr. Kurutz had it right when he said “If you don’t mind wiping out your 401(k), you might be able to furnish one room, maybe two.” I can think of no better place to put part of my retirement funds and enjoy the benefits, long term!
(2) The New Economy; Decorative Arts as Assets
August 13th, 2011 by admin
I enjoyed the study of macro economics in college, but real life experiences tend to clarify how much you really don’t know (and my oversight of micro economics). It sounds a bit like being in the decorative arts business most of your life. I always believed these objects would develop an economic asset model with a bid/ ask marketplace for valuation, trade, and liquidation. If you build it, will they come?
As a dealer in the decorative arts, the changes that have transpired in how the industry operates are a story of the fall of great dealers and collectors over the last centuries, to the auctions. It happened pretty clearly with implementation of the buyer’s premium and an inherent conflict of interest was introduced and ultimately imposed on the trade and public. It finally took a conviction by the government to slap the hands on the Sotheby’s/Christie’s duopoly’s conflict of interest. Along with deceptions like a secret reserve, these distortions affect the real valuation of these items.
Auctions are just rigged distress sales because there is no true marketplace. The irony is that the strongest growth coming from the Sotheby’s/Christie’s duopoly is their private treaty/faux dealer way of doing business. But it shows that they understand the evolving nature of our industry and are accepting dealer functions, and having skin in the game can be profitable. The economic model for dealers requires a consumer who pays and takes possession. The economic model for openly trading would allow dealers to negotiate pricing, terms, and transport; all services to the consumer. The problem is where are the consumers for these fine works of art and how will dealers survive?
We are all consumers and it should take one to know one. My vision on this ‘science” of economics is blurred at best! Why is the general public so apprehensive about these items when they are accessible and reasonably buyable? Where is the invisible hand of Adam Smith? Aside from currents of taste and style, unfortunately there is no true marketplace available for pricing and negotiation.
The 1st Dibs method is a proven successful challenger to the auction format. It allows a more natural process without conflict of interest, but it is severely lacking in the competition for higher priced and more discriminating quality inventory. This should be the area ripest for marketplace opportunities and potential profits as a dealer. The decorative arts need a place where valuation and sale are made convenient and available.
Aside from the logistical inefficiencies of the present decorative arts market, in the end it comes down to a confidence that investing money in this form of asset will be safe and productive both aesthetically and financially. The value received from a good period table, chair, or any well designed item should be tangible. Measuring a return on investment like any form of an asset, be it a common stock, real estate, or a set of 18th Century English chairs requires expectations based on a mix of knowledge and emotional decision making. All forms of assets inherently fluctuate in value over time; the decorative arts fit that categorization as much as any and warrant capital as an asset investment too.
The New Economy; Decorative Arts as Investments
August 6th, 2011 by admin
With the latest round of stock market gyrations from the Great Recession aftermath, where can you put your money? With assets measured in stability, the home investment was always considered rock solid. Now, is it US 10 year bonds yielding 2.5%? The idea of investing in decorative art items doesn’t sound like an impossible asset to use as a hedge to all the other options.
It’s a funny thought that I actually don’t like to push decorative art objects as “investments” because I don’t like to speculate as much as know what I’m buying. I can teach someone about an item but if they have a different idea of value, how can I fill the gap. Perhaps this item warrants consideration as an asset with a valuation. Like real estate, whether the same property or one that is similar, the time line seems to change with the price. The stock price of GE is a moving target. But the decorative arts have other measures for value. They don’t only appear on a financial statement and they have a form and physical qualities; what’s that worth?
The present economic environment has cause for any investor to look for a safe haven for their money. We are in a world where diversification is a necessity. The alternatives are US and foreign debt, stocks or gold verses real estate and art. The last two are in their own class because they are very tangible and can be functional and unique. However being of a physical nature, art and real estate lack the medium of an exchange for public trading. And the trading is not as easy as picking up the phone and calling a broker to execute a sale of stock to raise some cash.
As an investment, the safety of any asset is imputed in the price. Holding an investment without any return is better than losing the whole investment. My point is that we have a true asset class of decorative arts that is poised for discovery as a viable and preferable asset that has a consistent return of function and or aesthetics to its owner. While contemporary art has experienced a mammoth speculative and taste trend, traditional forms of art haven’t. The decorative arts, (short of dumbing down to inexpensive vintage 20th Century items), has certainly suffered to a greater degree.
Nostalgia for a time of good value, stability, and pleasure from the investment of your money sounds like a throwback to the Eisenhower era. We should only realize how good it was for most people. While that was a different time with different values, the collecting of fine art and decorative arts was widespread and attracted a wider age group. Even young people had respect for older items and knew some items were “special”. Where did this disconnect happen?
Somehow, my generation lost touch with the thrill of owning objects that now seems mundane compared to “trophy” items like cars, jewelry, technology, and name brand products. Buying at Sotheby’s or Christie’s has some of those characteristics. The decorative arts need a venue to make them appealing and approachable to the luxury market consumer, but not with the rigged auction format. Perhaps buying it at Newel will be that mark of distinction.
Daring to Decorate With the Decorative Arts
July 1st, 2011 by admin
Elle Décor Magazine has been setting the new standard of success in the shelter magazine competition. Their editorial style has attracted a hip and stylish following of readers and the work of designers who accommodate that sensibility. The void of classical furniture and period decorative arts that are pre-1940s is startling. Whatever happened to creative, dramatic interiors embellished with these interesting, functional, and well crafted items?
If you want to understand why today’s decorators feature these stark, white walled and glass residences, go look at an old Architectural Digest from the 1970s. What kind of stodgy, very old fashion rooms were featured? The wall paper (heaven forbid) and boring brown wood furniture would put anyone to sleep. Oh yea, there was some spectacular art on the walls, like today. In looking at the style of living that Billy Baldwin or Eleanor McMillen Brown created, it almost seems like something out of the 19th Century. Minimalism was a fine art form and not a generally accepted style of living.
But to those pioneers of today’s professional interior designer, an understanding and respect for the decorative arts was a priority. Just as collecting and living with these items was a hobby of the rich (Havemeyer, Frick, Hearst, Yves Saint Laurent, etc), the focus of today’s wealthy individuals is centered on trophy art. However, the decorative arts require more sophistication and knowledge than the ease of selecting a Damian Hurst or Renoir. Spending $45,000.00 on a Joan Miró print is easy; buying an 18th Century Italian painted console is a bit more daunting. It shouldn’t have to be this way.
As sure as the sun rises in the East, interior design will reflect the trends and influences of how society evolves. What we think of as the latest and greatest can in no time seem ephemeral. The needs of the affluent set the benchmark for the success of luxury items. Minimalism in the living environment of today’s affluent consumer doesn’t seem like something that should be a permanent standard of living. When it does break out, the followers of post 1940’s designs might feel like how dealers of pre 1940’s decorative arts have been doing for the last 10 years. Connoisseurship, knowledge, and taste aren’t dead yet. The heart beat might be faint, but it can be rejuvenated.
For me to be optimistic about the future of all the decorative styles would require a strong stomach in the present economic environment of my industry. The dealers and auctioneers, who ply this market and still are surviving, struggle with financial hurdles that any good turnover of inventory would solve. Shelter magazines abet the situation with predicable photos of rooms with a view but little or nothing in the room. All things considered, I’d rather look at interesting items than little or nothing at all. It doesn’t seem like a stretch of the imagination to envision an alternative to minimalism.
The Decorative Arts, Up for Grabs
June 14th, 2011 by admin
Today, in the higher end decorative arts market, it is not about what an auctioneer can offer (or demand), but how can dealers present a better alternative. The auction method as practiced by the Sotheby’s/Christie’s duopoly works quite well in the fine arts. However, when the profit margins are squeezed and demand is suspect, they run for the hills. Good decorative arts are now open to all, as these firms are unable to sustain the market.
The divide between fine and decorative arts has never been so wide. With the exception of some sculpture (i.e. Giacometti) the decorative arts, and particularly furniture, has become an anathema for most auctioneers to handle. Painting and fine art have advantages of mobility, name recognition, and taste considerations. Furniture strives for all of these qualities but plainly lacks consistency in these areas. However, decorative arts have characteristics that fine arts can never have, and that is an advantage that is both misunderstood and sorely lacking in their image. Function, craftsmanship, and historical interpretation are values that must be explained, interpreted, and appreciated. Furniture and the decorative arts have those elements, yet their visual traits lack a universal recognition.
Perhaps the decorative arts will always be relegated to a second tier of acceptance. Their day in the sun in the last half of the 20th Century was perhaps overdone with excessive decorating and a different way of life for today’s billionaire of the moment. For a price, instant gratification and trophy items are easier to obtain and don’t necessarily require knowledge and understanding of the object. Most auctioneers don’t have the motivation to teach but are focused on the deal and structuring it to their benefit. Dealers will always have this advantage of imparting knowledge, if they are to survive.
The decorative arts market is now officially open to anyone, dealer or auctioneer, who can offer the right individualized service to a client, be it a sale, purchase, or consignment. Competition for selling now at an auction or selling for a price or through consignment to a dealer now bears thoughtful comparison. In a market no one can control (the duopoly does a good job “trying” to control fine art) furniture and the decorative arts have been evolving into a game of survival of the fittest. As auctioneers act as the only and last resort to sell or liquidate, dealers have an opportunity for innovation with an alternative approach. Risk can be substituted with a measured, unhurried, and calculated way.
This new opportunity for dealers is fraught with similar issues and problems not to dissimilar to what the auctions have been trying to overcome. However, the big difference is the methods. In today’s market the one shot auction process is a real roll of the dice; the dealer however can keep his cards closer to his chest.
The New Dealer
May 4th, 2011 by admin
The classification of a dealer in the arts and antiques business has always been restricted to a particular specialty or style. The level of price point adds to the risk and rewards. Has this basis of the individual dealer format based on price and knowledge narrowed the concept of diversity; is such specialization systemic or more of an image? If it is an image, should art and antiques dealers reinvent themselves as fine and decorative arts dealers?
The opportunity to change the image of a business or an industry can come by luck, opportunity, or good vision and planning. Presently the art and antiques industry has no direction or a cohesive voice among its many dealer organizations and one would expect that with this kind of fragmented leadership there isn’t the possibility to create or alter the public perception of what we do and how we do it. It seems that only the drama of TV shows like the Antiques Roadshow or American Pickers can enter the public consciousness of who dealers are and how they operate. In a way, dealers are portrayed as either elitist or a bit like buffoons who get lucky. Being a refined and approachable businessman seems like an oxymoron.
For dealers to survive the last resort is to find aid in numbers with the art and antiques show format, not that shows offer any kind of new medium to reinvent how dealers portray themselves and their industry. The show format is so predictable that I find it reinforces everything that should be changed. The weakness of being a dealer are clearly on display, with their need for conformity and lack of individuality, except of course for their pigeon hole specialty. A show affords the exhibition of a little inventory in a lot of fields. There always is an even distribution of English, French, 20th Century etc. styles but a narrow selection within those styles. Dealer need more than shows to revamp their image; they need individuals who can stand alone and offer compelling inventories to be visited in a gallery setting. The public needs and is demanding the creativity of presentation and selection that a gallery setting can offer. It’s what the auctioneers do so well and fine art galleries thrive on.
For dealers in antiques to remain viable, maintaining the methods of the past will not suffice. Old ways of relying on knowledge and stogy dealer organizations isn’t sexy or compelling to today’s fast moving, information digesting consumers. The success of a business concept like 1st Dibs is based on being accessible and offering a meaningful experience to its users. For dealers, this also means being relevant and accommodating what consumers want and how they go about getting it. While the internet has certainly opened up the market in many exciting ways, the demise of the retail store is not dead.
Innovative marketing and presentation will always evolve. Whether it is Starbucks or Bergdorf Goodman, the need to re-invent and be creative in the mind of the consumer is paramount to being able to succeed. Antiques dealers, or rather decorative arts dealers, need to be ahead of the curve and not be so predictable. Who knows, maybe dealers can make decorative arts really fashionable again.
The Next Generation, Part 2
April 21st, 2011 by admin
Building a business to survive for multiple generations is a daunting possibility. Bill Gates hasn’t done it yet, but he certainly has everything in place for Microsoft to be passed on to a next generation. Could he perceive how Microsoft would be operating in a 3rd or 4th generation? The antiques business might not seem nearly as significant, but the future promise is there too. Newel has reached its 4th generation, and the possibilities now become more exciting than ever.
The fact that we now have a family member in the firm is thrilling and offers many opportunities for an unbiased viewpoint of how things are done and what alternatives could be explored. However, the decorative arts business is based on knowledge and gut feelings; one could be taught and the other has to be in your passion for the objects. But those skills don’t guarantee a business lasting more than one generation.
The issues of capital, market trends, and management are more central to the foundation of a company’s ability to survive. Those three factors have caused many dealers in the last 10 year around the world to exit the industry, while auctions seem to not only endure but actually grow. Along with their deceptive practices, the deck seems pretty stacked against any future continued existence in the trade.
The world for all decorative arts dealers has been and will continue to evolve just as style and taste change. And there is always the “X” factor of technology. Walking the store with an iPad is going to a reality (for a while at least) and competition for the attention to well educated affluent consumers will be necessary to survive. Therein lay the real realities for any immediate future prospects in this field.
The decorative arts have a clear deviation from the image of fine arts. Furniture and accessories done by the most outstanding designer of their time pale with great artists who painted canvases. Were Jacques Adnet’s decorative arts designs no less important than any mid-20th Century artist; how about commissioned works by Robsjohn Gibbings, Gio Ponti, or Frank Lloyd Wright?
The image issues with the decorative arts require a “makeover”. The next generation at Newel will have to deal with this supreme challenge. Building a new public perception and acceptance for my inventory won’t come from dealer organizations. The next generation in this business must have entrepreneurial imagination and creativity, along with knowledge in the field. If not, how will it survive?
The Next Generation, in the Trade
March 17th, 2011 by admin
Any family owned business run by the third generation, probably has had to evolve or have a format that is very predictable. I would be ignorant if I didn’t think luck and timing never hurt either. A fourth generation of family is lurking in my business; what must the possibilities of the decorative arts trade future be?
Reports that the antiques trade is rebounding is the biggest joke in the fine and decorative arts world. You just can’t keep contemporary or 20th Century modern sculpture and fine art down. As a fourth generation dealer focused on the decorative arts, you better have luck and timing, or a real business plan. Business plans in the decorative art aren’t currently being well marketed, but probably don’t exist. The state of this part of the arts industry is rudderless and even the Sotheby’s/Christies duopoly can’t and don’t want to deal with it. If there ever was a reason to expose the reserve, these sales would be cannon fader for everyone.
Auction methods aside, the opportunities for Newel are to enhance our fantastic rental business to TV and motion picture productions, with the salability of the items. Selling is a challenge. Today’s customer is savvy and knows how to procure information about anything, anytime, anywhere. Frankly, I don’t see how my experience in the industry gives me any clarity about tomorrow and what opportunities could out there. We need now the energy and thinking of the next generation, a 20 something.
For me as a dealer, I still have a fond memory of how my grandparents build Newel with a no-nonsense focus on a rental business starting with Broadway, and then movies and TV along with window display and commercial photography. A land line telephone and a mechanical adding machine was all the technology you needed. Somehow, the second generation missed something between that technology and an iPad 2 technology. It must have been luck and timing back then.
Number four will have quite a different method of operation, but it will always come down to substance in our industry. The proverbial “eye” will never be out of fashion, and is the only requirement to be “in the trade”. Without that there is limited entry in the art world. However, having ultimate physical control of inventory presents the greatest opportunity. For Newel, it isn’t wasted space; it is a rental possibility and/or a saleable item.
I am truly excited about the potential creative opportunities if a family member wants to participate in this business’s future. However, the roots of success and long standing of the company has to do with the unique relationship my grandfather developed with clients who needed his products. He provided service and attention to detail. Perhaps this is still a requirement for any business to continue.