The Role of Art & Antique Dealers An Added Value 4.2 Dealer Business Models
The most common business model for dealers 50 years ago was built around the simple premise of “buy cheap, sell dear”.
For dealers in large art markets such as the US and UK, the model used by many dealers from the 1940s up to the end of the 1970s was built around finding inventory at low prices, often in one location, and selling it on at a substantial mark-up in another location where it was more highly prized. This was described by dealers as a successful strategy justified on the basis of dealers’ sharing their acquired knowledge with buyers and on their understanding of values in the post-war period. Sellers needed money and owned a relative abundance of high quality art and antiques that they were compelled to sell, sometimes at historically low prices. Buyers in wealthier locations often valued art more which allowed for higher mark-ups. Some dealers commented on the relatively less formal requirements for accounting connected to sales compared to the current market. Opportunistic, clever business people in this period took advantage of these market conditions, which paid off for them in the 1960s and 1970s, with many wealthy and powerful dealers emerging with great collections.
However, through the 1980s and 1990s, the supply and demand fundamentals changed significantly as did the balance of power in the art market. Dealers began to compete directly with auction houses, and the supply of the best quality works in some sectors started to dwindle. (Auction house competition and supply issues are discussed in Chapter 5.)
The basic premise on which many businesses are based has now shifted to finding/ accessing stock (and buying or not buying), adding services and expertise, and selling at prices determined in a competitive market place.
Today many dealers base their competitive strategies on being able to find and access the best quality pieces for their buyers and adding high value services such as expertise surrounding the object, its maker, and its history, authentification and restoration. The decision to buy the object outright and sell it on or simply act as an agent to the transaction is often made on a case-by-case basis. Both sourcing works and selling to buyers now takes place on a highly competitive market, with dealers pitted against each other as well as engaged in head to head rivalry with auction houses.
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Historical & Future Perspectives
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