Contemporary art auctions are happening left and right in London this summer. Sotheby’s had one on June 25-26, then Phillips de Pury (June 29), and now Christie’s is running one (June 30-July 1).

Some have expressed pessimistic predictions on sales figures. The famous British art critic Ben Lewis, who made the documentary “The Great Contemporary Art Bubble”, is among them. He depicts the art market in a far from flattering way, describing it as a world of secret business and market manipulation, where unscrupulous art dealers inflate prices.

On September 15th 2008, the day Lehman Brothers collapsed, and the world finance market began its worst downfall in decades, Sotheby’s held auctions that sold art for a record total of £111m. Because of the critical standpoint Lewis had taken, Sotheby’s had banned him from these auctions, accusing him of a negative view of contemporary art. However, the art market was not shielded from the blooming recession, and eventually the art bubble also burst. Since it’s peak in September last year, contemporary art prices have dropped in price by up to 50 percent.

However, this may be about to change again, and Lewis’s predictions may prove to be overly pessimistic. If the outcome of the recent Art Basel fair is anything to judge by, auction houses could expect good results to come. The art fair experienced its highest visitor numbers ever, and according to the Wall Street Journal, organisers talked of “unexpectedly strong sales”, and many galleries were reportedly satisfied with their outcomes.

This possible resurgence suggests that buyers interested in timeless luxury still see the long-term benefits that art can offer even amidst the recession. Art gives them the chance to invest in an asset that they can surround themselves with in their homes or work spaces, rather than just put in stock portfolios, and which offers social status on a level incomparable to other commodities.

The Wall Street Journal quotes the Cologne dealer Gabrielle Ammann, from Art Basel’s parallel fair Design Miami/Basel, who stressed, “This year we have had really important collectors who are interested in beautiful and timeless design, not those who want quick money-making blue chips”.

Both Theta and Lambda types should be attracted by the benefits that buying art has to offer. For Thetas, who use socially-derived understandings of product characteristics as a basis for their consumption, the social status that owning art brings will be appealing. For Lambdas, a piece of art could be seen as the ultimate expression of individuality, and purchasing it fulfils their wishes to stand out as unique.

Photo by amandafarah

The diamond industry may be beginning to recover, according to De Beers executives who spoke at the Diamond Town Hall Meeting at the Antwerp World Diamond Centre earlier this month.

Gareth Penny, De Beers managing director, said “diamond inventories have fallen to levels which have justified increasing the mining production of the De Beers mines after it had been reduced by some 90 percent in the first quarter of the year.” He also said “The demand for De Beers rough diamonds is picking up,” and that “De Beers production is increasing to keep pace with demand. Retail sales have also shown an improvement.”

He noted that in the period from 1970 to 2009 there were four major recessions in the US, and in the five year period following each, rough prices rose sharply. Penny expects the same to happen this time. I do hope he’s right, and that demand truly is rising. It would be all too easy for him to just tell the crowd at the town hall (including sightholders) things they want to hear.

Photo by Hamza Hydri

A report in Time magazine suggests luxury brands have taken yet another blow in the financial crisis. It is quoting a recent report by Bain & Company saying that the luxury market is expected to shrink by 10 % in 2009, with apparel being hit the hardest. This is apparent in the worlds upscale department stores where you can find racks upon racks, and sometimes entire collections of designs by Marc Jacobs, Chanel, Dior and Armani- to name a few- market down by as much as 40%.

With this in mind, the French couturier Christian Lacroixs’ recent filing for court protection from creditors (similar to Chapter 11 bankruptcy in the United States) on May 28, comes as no surprise. But despite this significant setback, Lacroix’s chief executive, Nicolas Topiol, has indicated in a recent statement that the brand will continue, saying “Since the acquisition of Christian Lacroix SNC, we have been committed to the brand and to its high-end development. We will continue to do so, but the sharp downturn of the luxury market has significantly hurt our revenues”.

Even though clearly it is indicative of the state of luxury over all, the financial crisis might not be the only factor to blame for it. Lacroix launched his label in 1987 with the financial backing of Bernard Arnault, chief of LVMH Moet Hennesy Louis Vuitton, and has seen 20 years of creative success, with a great influence on fashion. Despite this, Lacroix could never turn a profit, with a continuing inability to translate his unique high-end fashion flair into more accessible products, like fragrance, lipstick and accessories. Because of this, Arnault sold the brand to the Falic Group in 2005- at a time when luxury consumption otherwise was in full bloom.

Companies might need to turn the ways in which they communicate the benefits of their products on its head. Long lasting quality resulting in low cost-by-wear, as well as great second hand value, are recession friendly qualities that could be pointed out in a media climate where focus on ‘recession chic’ may leave a lingering distaste for conspicuous consumption and parading luxury labels.

This might be further proof that luxury consumption in the financial crisis is shifting in a Theta direction, with Thetas looking for designer goods that hold their value over time, and can be passed on to the next generation. As Lambda types instead feel that luxury holds its meaning- rather than its value- over time, they are less likely to be pursuaded by these kinds of arguments. Therefore it is still important to remember that there will always be space in the market for both Thetas and Lambdas, and although recession times might create a need to motivate consumption in new ways, long-term effects should be remembered in order to avoid alienating important customer segments.

World famous sports and entertainment arena Madison Square Garden in New York City, is developing a “supersuite” for the highly affluent segment of its clientele. The 5,000-square-foot suite will fit up to 300 people and is said to feature granite-topped kitchen islands, formal dining tables, full bars and a fireplace.

The cost of enjoying the supersuite remains to be confirmed as pricing decisions have not yet been made, but the Vice Chairman of MSG, Hank Ratner, has said the company is trying to learn from other sports venues who are cutting their prices in an uncertain economy. The Yankees, for example, have cut the price of over 100 front-row seats from $2,500 to $1,250 after seeing empty rows of the top-priced spots game after game.

But prices are still likely to be only in range for a select few. MSG is determined to pursue the development despite difficult financial times, and hopefully there are still enough people able to afford spending their money on this type of experience. As MSG itself is already a very strong brand on a global scale, it definitely has good prerequisites.

The supersuite is also likely to appeal to most people, whether they have Theta or Lambda worldviews on luxury. The self-focused Lambda would be attracted to the opportunity to show off his wealth in this one-of-a-kind environment. The Lambda would also be drawn to the freedom of movement and sense of independence that the suite would offer, as compared to even the most attractive seats. The socially-focused Theta would instead find it appealing as a means of gathering all of his friends and associates together in one place.