Despite their long tradition and history, the world’s two largest auction houses continue to struggle—paving the way for greater success at their smaller rivals. Sotheby’s and Christie’s are suffering declines due in part to images tarnished by scandal. Last year, the two were found guilty of price fixing and agreed to a $512 million settlement. While privately owned Christie’s does not release financial information, its chief rival, Sotheby’s, has revealed their financial struggles. In January, the house, which posted losses in 2000, announced restructuring—including an 8% reduction in its workforce.
The house is also struggling with online auctions, having shut one of its two websites after the resignation of its online division president.
The restructuring announcement comes just shortly after Moody’s Investors Service cut their credit rating to junk bond status.
Amid the restructuring are plans to focus on jewelry, along with paintings, as one of its major markets. The move, a departure from its historically broad focus, mirrors the strategy of the world’s number three auction house—Phillips.
Phillips, which was bought by giant luxury holdings company LVMH in 1999 and recently merged with Geneva art dealers Pury & Luxembourg, has announced plans to focus on only high-end merchandise like paintings, jewelry and furniture. The house’s clean image and its strong backing in LVMH has allowed it to further tweak its larger rivals by wooing key employees.
In January, 30-year Sotheby’s veteran jewelry executive, John Block, was hired as chief executive of Phillip’s North American operations. Block, who served as co-chairman of Sotheby’s global jewelry department and vice chairman of Sotheby’s North America, will run day-to-day operations at Phillips while running its jewelry department worldwide.