Editor’s note: This story originally appeared in On Balance, the ARTnews newsletter about the art market and more. To receive the newsletter every Wednesday, sign up here.
Given the well-publicized “correction” of the art market last year and this year, one might assume that the larger luxury goods market would decline as well. If so, you would be sorely mistaken.
A recent study analyzing global luxury spending found that art sales grew just 1 percent to 3 percent last year, while the luxury sector as a whole grew 8 percent to 10 percent. A study published in June by consulting firm Bain & Company and Italian luxury goods association Altagamma estimated the global luxury market at about $1.66 trillion in total revenues, of which just $45 billion was for art.
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Bain found an estimated 20% decline in spending at auctions, based on a survey of industry participants and analysis of public sales data. (This is consistent with recent information released by major auction houses: Christie’s reported in July that auction sales were down 22% in the first half of 2024 compared to the second half of 2023, while Sotheby’s reported a 25% decline in auction sales for the same period.) Meanwhile, private dealers saw modest growth as collectors sought more in-person interactions after COVID-19, the report said. The report cited a slower recovery of the U.S. market, ongoing geopolitical conflicts and more cautious spending amid “inconsistent performance” in Asia as reasons for the decline in auction figures.
“The art market is growing less sharply in 2023, and the auction market continued to slow in the first quarter of 2024,” Joel de Montgolfier, co-author of the report, told ARTnews. Montgolfier, executive vice president of Bain’s global retail, luxury and consumer products practice, added that “there is a perception of contraction” among industry insiders.
Art also underperformed compared to other growing smaller luxury categories, such as jewelry and collectibles.
The 2024 report, published by UBS in collaboration with Art Basel, estimates that the $65 billion art market has grown by just 1% since pre-pandemic. The study relied on self-reported revenue figures and did not publish any metrics on profit margins.
Macroeconomic uncertainty is not expected to have a material impact on the ultra-rich, at least according to a May report from Deloitte, which found that family offices manage an average of $2 billion in intergenerational wealth each year, and that roughly 70% of those surveyed expect their wealth to rise this year.
Bain’s research also noted broader trends in luxury spending: traditional luxury items like fine art saw limited growth, while experiential luxury items like luxury travel saw strong growth. Montgolfier said consumers are increasingly preferring experiences over physical objects, and established brands are turning to the experiential sector, which functions like hospitality.
The art world has also responded to the trend: Hauser & Wirth founders Manuela and Iwan Wirth opened the luxury Fife Arms hotel in the Scottish Highlands, as well as restaurants in St. Moritz, London, New York and Los Angeles. Earlier this month, Sotheby’s announced a deal with Marriott Luxury Group, a subsidiary of the hotel chain, that will provide venues in various countries for the firm to show its wares.
George Hammer, global head of luxury marketing at Marriott International, told ARTnews that the company is looking to tap into a new level of exclusivity: “We’re seeing a big shift away from traditional transactional luxury. People are looking for more than just surface-level beauty,” he said.
Meanwhile, major luxury brands like LVMH, Loewe and Lanvin have expanded into the art world by commissioning sculptures, funding major art prizes and sponsoring exhibitions. (LVMH opened its flagship art space, the Fondation Louis Vuitton, in 2014. It also owns and operates several hotel brands and is set to open a Louis Vuitton hotel in Paris in 2026.)
Natasha Degen, a professor at the Fashion Institute of Technology in New York, sees the rise of fashion brands moving between commercial and public spaces, from hotels to museums to private foundations, as a way to capture customers’ attention for longer periods of time.
“It’s a strategy to keep visitors in the space longer and deepen the 360-degree lifestyle brand’s relationship with consumers,” she told ARTnews.
Meanwhile, auction houses are increasingly relying on non-fine art luxury categories to drive revenue. Last year, jewelry, watches, memorabilia and other luxury items generated nearly a third of Sotheby’s total revenue of $7.9 billion. At Christie’s, the figure was $2.1 billion. Josh Pran, Sotheby’s global head of luxury goods, told The New York Times in May that such auctions are “an incredible entry point for new clients,” with half of its buyers and bidders being new to the auction house.
Montgolfier said the overall slowdown was being exacerbated by luxury groups still struggling to attract high-end buyers, as art acquisitions remain low on financial priorities. A tense political environment is curbing spending ambitions, Dejean said, which is a big factor in the sluggish revenues. “In times of conflict, it is seen as inappropriate or excessive,” he said.