Is Business In The Trade Going to Come Back Now?
April 2nd, 2010 by admin
While I absolutely love macro-economic theory, I deal in a micro-economic business. The decorative arts industry has only recently, with the effects of the recent “Great Recession”, experienced a significant financial shock from this general economic condition. Perhaps the Great Depression is the only measure of a true economic cataclysm, but the awareness of this present downturn should offer exceptional opportunities. FYI, the New York Stock Exchange S&P 500 Index is now up over 92% in the last year.
When a macro-economic event occurs, we in the trade have historically experienced the effect of the change in a delayed manner. Like any commodity, pricing and more so demand are the measuring sticks for art and antiques. The more cash in your pocket the more you can spend; and price becomes less important than finding what you want. This is micro-economics at its best and it is why possession of these items, either by a consumer, collector, or dealer requires a different mindset. Money only stirs the pot; owning a tangible object that doesn’t pay a cash dividend must give some kind of return that is complex to quantify.
One of the great opportunities for this industry is the thought that the general public will sense that there is value in our industry’s products, just like any other form of an asset. Dealers and people in the trade understand that, but the general public is now only beginning to see this possibility through TV shows that highlight valuations (Antiques Road Show, American Pickers). The public’s fascination with selective auction prices can however make it seem out of financial reach too. But the seed for public awareness of this viable asset class could be planted, and cultivating this prospect would bring new statute to the industry. Certainly, giving this industry’s merchandise the status as an asset class would be confirmed if it could be re-established as a viable investment for a retirement account. These items can’t be worse than owning the stock of Citicorp, New York State Bonds, or for that matter Greek government bonds. You also have the opportunity to make your own investment decision on these objects.
I don’t think the present pace of business is like it was a year ago. That conditions have already improved in some sectors of the trade, just like the rest of the economy, is clearly evident. Like most industries, we have experienced a shakeout in the number of operating businesses and other forms of cutbacks and efficiencies have been forced on those that are still functioning. Even the big auctions, with their economies of scale have had to reevaluate how their bottom line can avoid red.
The prospect of a leaner industry with an improved and new respect for its wares presents an awesome opportunity. Under these conditions, I like the chances for success and how the new dynamics of change can bring on rejuvenation and success to the business.
Anna Karlsson wrote on 04/22/10 at 9:40 pm :
The state of the trade is very interesting right now. We run a marketing firm specializing in antiques and fine arts marketing — we’re the only one in the business — and we have found interesting ways to increase business for antiques and arts dealers. Read our blog The Art of Marketing Fine Arts.
Best,
Anna
Marcus wrote on 04/26/10 at 3:27 am :
“…if it could be re-established as a viable investment for a retirement account.”
Without proper regulatory checks this will never happen. As a person makes an antique purchase they may want to consider it a consumable, rather than an asset, as they will very rarely get any less than the highest price a dealer can shake them down for. If you are shrewd that may not happen, but otherwise you’ll have to rationalize that you “just love the piece and don’t care about cost…”
I just came home from an antique shop run by yet another typical ripoff dealer. Not only over inflating prices, but saying cash would lower the price considerably. Not paying taxes I see. So many ripoff dealers, and not so much the current economic climate, has turned consumers off.