Ed Dolman, Phillips’s new CEO, is in the FT today with a personal profile keyed to the firm’s posh new “game-changing” building. Georgina Adam is skeptical that Phillips can compete on its low cost structure. But there’s every chance that the Russian owners of Phillips don’t view the building itself as an investment in the auction house. Central London real estate is the preferred place to park profits earned in less stable parts of the world. There’s every chance that Mercury—which sells Rolex, Ferrari and Bentley in Russia—is doing the same with the Phillips building.
Closer to home, Dolman outlines a new strategy that treats cutting-edge and recently flipped Contemporary art as part of the “lifestyle-to-luxury segment:”
“Yes, Phillips is not making the profit we want to at the moment but the business plan is what interests me,” Dolman continues. “I think the classic model of Sotheby’s and Christie’s needs changing – it is anachronistic. Their fixed costs are very high, and they have to finance them by charging more and more commission. Our business is lean, it is focused on contemporary art and I believe that sector will continue to grow strongly.” So while the investment seems high, he claims that Phillips, compared with Sotheby’s and Christie’s, has a far lower fixed cost base.
“We are not competing in the $60m-$100m works of art market,” he notes. “Phillips has a reputation for identifying rising young artists – it can make a good and compelling case for selling in the $1m-$5m range.” And he points out that its average lot value, at $105,000, compares well with Sotheby’s and Christie’s, precisely because it is focused on far fewer specialities.
[…] “We are interested in plugging in to the contemporary lifestyle-to-luxury segment of the global market,” he explains, talking of extending watches and jewellery sales, as well as growing geographically, notably by expanding into Asia. “It is inevitable for us to have a presence in Hong Kong soon.”
In conclusion, he says: “Phillips is still in the investment and growth phase, but I believe I will see it carve out a solid share in the global contemporary art market in the coming years, have the capacity to sell in fields such as contemporary Chinese and African art … and be in profit.”
Could Phillips be a game changer? (FT.com)