Strategy for Art Galleries

The Thinker, Auguste Rodin, Waldemarsudde, image by Stephen Skiba

The following is a brief venture into various strategic positions and trade-offs for art galleries with examples from my personal background and insight from competitive strategist Michael Porter.  A majority of business strategy discourse revolves around major manufacturing, retailing and corporate models, however there are substantial lessons for art galleries and other small cultural businesses from these models.

Simply put, strategy is just using unique strengths to achieve a goal. But before talking about specifics, let's talk about a gallery's operation in the most 'abstract' sense (art joke). The first thing any business does is talk about its goals (such as make money, exhibit new artists) and its strengths (such as good client base, good location). Second, an appropriate strategy is developed to take advantage of these strengths to achieve the goals (we'll talk about this later). Third, after declaring the strategy, the gallery decides on actions to take to get to the goal. Finally, the results of all these steps are reviewed to see how well the whole process worked.

Any gallery (or any business) has to really, truly, honestly, deeply diagnose its specific strengths and weaknesses, only then can an appropriate strategy be developed.  
Many galleries fear admitting their weaknesses, but it’s important to note that a weakness is the inverse of strength and therefore should shape business strategy just as much as the other. A company that constantly strives to improve on arbitrary or insignificant weaknesses risks taking a disproportionate focus on what the company can't do instead of leveraging what it can do well.

For example, few if any galleries can deliver a full-spectrum, all-options service or inventory to a full-spectrum clientele, and even fewer would be able to do so at a profit. Instead, a strategic gallery finds its position within the global art market by assessing its s
trengths and weaknesses, and then finding an audience who needs certain features and who doesn't mind tolerating a lack of other features. This is your niche or "position".

Note: Strategy is never incorrect on its own, but a loose definition of goals or a dishonest assessment of strengths and weaknesses can lead to an inappropriate strategy and subsequent failure to achieve a goal.

A webpage for Volta exhibiting galleries.  How many of these logos look the same?  Which galleries stand out?

Position is an important component of strategy, and there are several positions a gallery can take. In Michael Porter's piece, "What is Strategy?", he discusses different positions: a variety-based position, a needs-based position, and an access-based position (or a combination of the three). A variety-based position is more common for galleries that can have both high and low sales.  For example: both Saatchi and Bekman have brick and mortar galleries for high end art sales, as well as an online stores (Saatchi Online and Bekman’s 20x200) that sell works as low as $20.

A needs-based position focuses on a select, often elite, subsection of the total buying audience. Focusing on an elite or higher income audience is more sustainable for a gallery in a needs-based position, since it allows higher revenue per unit sold or delivered.  This needs-based position is more appropriate for those who invest in art as an asset, and not just an aesthetic item. Examples of this would be “blue-chip” galleries, where the usual base price for artwork is far beyond discretionary income for middle class, therefore their purchase is believed to be a wise financial investment.

An access based position focuses on gaining traction with a localized resource, commodity or region.  Access based positioning is a rare position for a gallery because it can require limiting the scope of sales. This limitation is offset by increasing the share of the market for that resource, commodity or region.  An example of this would be gallerist Jeffrey Dietsch’s representation of artist Keith Haring’s estate following Haring’s death.  Although it is not a complete monopoly since Haring’s work was bought and sold well before his death, Dietsch effectively controlled a significant share of the market for exhibiting and selling Haring’s work.

Porter's other important component of strategy is the trade off.  A trade off occurs when a strength or asset makes up for a weakness or liability in another area.  Contrary to contemporary use of the term, a trade-off is not a negative thing, it is a natural by product of leveraging a company’s strength.  A company that tries to limit every trade off places a tourniquet on taking full advantage of its strengths because its diverting resources to a less productive area.

My current gallery 17 Cox relies on many essential trade-offs. We try to amplify our unique strengths to overcome weaknesses.  For example, having a back-road, suburban location means less foot traffic but the reduction of rent per square foot is essential for our monthly overhead.  The reduced foot traffic is again off-set by focusing on web, social media and press exposure.  Another important trade-off is that because we exhibit large-scale, site-specific, installation art, we will have far fewer sales, however these large works are more sensational and garner more press support than traditional small scale artwork.  In this example, the reduced foot traffic and sales are an intentional weakness, it's all a part of the total strategy that amplifies emphasis on press and online notoriety.  Note: We don't focus solely on one dimension (ie press); that would be dangerous.  It’s good to be well rounded (of course we want foot traffic and sales!) but not at the expense of the overall strategy. 

I think any promising gallery needs to be focused but also flexible on its overall strategy, because achieving a declared goal is only successful if that goal is still relevant.  The routine final step of any exhibition is to self assess and determine if goals for the exhibition were met, still desired or if they are even plausible for the near to distance future.  Strategy is not a single event in a business, it is one step in a cycle that continues to be refined.

Trade-off: 17 Cox is located on a one way street in a suburb but our rent is CHEAP!