Christie's auction house's strength as seen in its success in digital transformation

Since the start of 2021, auction house Christie's has been systematically incorporating exhibitions in its bases in Dubai, New York, Geneva, and Hong Kong, while also increasing its online watch sales. As the COVID-19 pandemic accelerates the arrival of a new era, what strategic insights have they gained from going online? We look closer to the answer in this interview with Serge Maillard, publisher and editor-in-chief of Europa Star.

For nearly a decade, Christie's has been exploring how to effectively combine real-world and online experiences.

　Despite the COVID-19 pandemic, Christie's has drawn up an ambitious schedule for 2021, with over 10 watch sales planned between March and June in Dubai, New York, Hong Kong, and Geneva. Most of these events are characterized by online events lasting two weeks or more, with on-site exhibitions of the watches on offer.

　This ambitious program kicked off in the Middle East with "The Dubai Edition," a 100% digital sale that took place from March 24 to April 8. This 24-hour watch sale was the largest online sale of its kind ever held, with approximately 200 lots auctioned. It lived up to expectations, attracting bidders from 37 countries and raising a total of more than US$14 million.

　The sale was headlined by a Patek Philippe Sky Moon Tourbillon Ref. 5002, which sold for US$159 million, setting a new double record as the most expensive watch sold at auction in the Middle East and the most expensive watch sold in a Christie's online auction.

　These results seem to confirm the accuracy of Christie's digital strategy, as the spread of COVID-19 has accelerated the shift to digital. In fact, Christie's has decided to gradually phase out printed paper catalogs and shift to digital communication. The online sales held in Hong Kong and New York from April to May marked the next milestone in Christie's digitalization and watch offensive. However, Christie's did not retreat from physical sales. On May 22, an important live session was held at the Hong Kong Convention and Exhibition Centre, where just 18 fascinating lots were auctioned under the theme "Legends of Time," setting a new record for sales at a Christie's watch auction.

　The person who has put together these guidelines for Christie's is Aline Schiller-Walbaum, Global Managing Director of the Luxury Division (Jewelry, Watches, and Wine). We spoke to her about the results of her long-term strategic thinking.

An interview about Christie's digital transition

"What's unique about watches compared to other collectibles is that the customer profile is similar both in person and online."

European Star:Your online watch auction in Dubai generated over $1400 million in sales. How do you see the roles of physical and online evolving in the future?

Aline Shira-Walbaum:It may come as a surprise to some, but our first online auction was 10 years ago, in 2011. It was held in conjunction with a major retrospective of Elizabeth Taylor's jewelry in New York. In addition to her priceless jewelry collection, we also auctioned everyday items that Taylor had owned, such as a small Seiko clock radio. We decided to try selling these items online. We expected to earn around $100 million, but ultimately achieved approximately $1100 million. We were ahead of our time, achieving such incredible results 10 years ago. The seeds began to sprout, but it took time to completely change our thinking. We were changing something that was already working well. First, we had to convince our internal staff of the validity of online sales. We also had to reassure them that online sales complement, not sacrifice, our brick-and-mortar sales. Thanks to our persistent efforts and the constant development of new digital tools, we were able to adapt quickly even when the pandemic hit.

European Star:Please tell us about Christie's response to the COVID-19 pandemic.

Aline Shira-Walbaum:With no short-term alternatives available due to the inability to sell in person, both staff and customers accelerated their shift to digital. It was a remarkable shift, especially among customers who had a strong preference for being in person and seeing the product. As we ourselves have come to understand over the past decade, many customers realized that digital sales were not a second option, but had value in and of itself.

European Star:Can you give us some concrete numbers on the transition to online business?

Aline Shira-Walbaum:Looking at our online sales statistics since the start of 2021, we see that roughly 40% are existing customers who had already adapted to online shopping, roughly 40% are new customers, and—and this is the really interesting part—the remaining roughly 20% are customers who were on our customer list but had no online purchase history. What's clear here is that the majority of people understand that there's no point in resisting innovation by sticking to the "old way." So, what really matters to our customers and us is not the sales channel, but the items being auctioned and the passion surrounding them.

"It highlights the curatorial role of auction houses amid the information overload that comes with online shopping."

European Star:We can now see completely virtual artworks on the blockchain, or NFTs, including watches. What are your thoughts on this phenomenon?

Aline Shira-Walbaum:As long as there is artistic intent, we can talk about art whether the object is real or virtual, whether it's a unique piece or something that can be replicated. I remember a similar discussion when video artists first emerged. I think there should be "originally" digital artworks, especially if they're not feasible in the real world. For example, Mike Winkelmann's "Beeple, Everydays: The First 5000 days" (an NFT artwork that sold at Christie's in 2021 for $6900 million, paid for in cryptocurrency) is a collage of 5000 digital images. However, the work was created by a human being. I think artworks created by artificial intelligence will be even more disruptive.

European Star:The internet has broken down the barriers of space and time. Do you still think that distance sales still make sense? And will Christie's continue to sell watches online in the future?

Aline Shira-Walbaum:In some ways, we're already on this path with the rise of online sales. In 2021, we've already held sales in Hong Kong, Dubai, and New York. In fact, our sales calendar is getting busier and busier, even in the summer. That said, we don't expect e-commerce to become a permanent sales platform. This model is more of an "accelerated moment." Compared to time-sensitive sales opportunities, we believe it will allow more customers to participate. This creates excitement and interest, allowing us to structure our exhibitions and sales more broadly. Rather than offering everything "in one place," we will plan and organize our exhibitions in a way that helps customers avoid getting lost in the information overload. Our role as curators will become more essential.

European Star:In physical sales, for example, some amazing records are set as bidders furiously bid in the final seconds when all is said and done. Can this excitement be replicated in a two-week online sale?

Aline Shira-Walbaum:You're right. One of the keys to success in physical sales is the need for a decision in the here and now. Alibaba's cave door isn't always open, or it would lose its value. This is one of the reasons we still believe so strongly in the value of physical sales. At the same time, we see this happening online. Even if a sale takes place over two weeks instead of 15 minutes, the final moments can be just as exciting as a live event. This is the "syringe" effect, where a surge of bids occurs just before the deadline.

European Star:Is the digitalization of watch sales any different from other collectibles categories?

Aline Shira-Walbaum:What's striking about the watch industry is the relative lack of significant differences between the profiles of in-person and online buyers. Over 80% of both are male, and the average age is roughly the same, 47-48. The majority age group in both is 34-45. Furthermore, those aged 55-64 account for a larger share of buyers than those aged 25-34, a trend that also extends to online sales. People over 75 are also actively engaged in digital sales. In other categories, such as jewelry, the difference is even greater, with online users also younger. Watch enthusiasts, regardless of age, appear to be increasingly online. Ultimately, the internet is a powerful tool for acquiring new customers, accounting for more than 40% of participants at each auction. Globally, the potential is enormous. Beijing has more billionaires than New York. New wealth is being created, and our mission is to help them navigate the journey from consumption to collecting.