The Art of Auctions – Interview with Sotheby’s Managing Director of Global Luxury
Josh Pullan, Managing Director of the Global Luxury Division at Sotheby’s, is successfully broadening its product categories, implementing a digital-first approach and is introducing a brand-new approach to auctions itself – all at an institution that is over 277 years old
That the sneaker resale market is a multibillion-dollar business was never in question. But apart from a motley crew of online websites and a few individuals globally, no one had quite attempted to recognise or formally address that segment – that’s until Josh Pullan, managing director of the Global Luxury Division at Sotheby’s, decided to change the game earlier this year.
In April, Sotheby’s sold a pair of Kanye West’s Nike Air Yeezy 1 Prototypes that he wore to the 50th anniversary Grammys in 2008 for a staggering $1.8m – making it the most expensive pair of sneakers ever publicly sold, and the first pair to command over a million dollars in a public sale. “The sneaker business has really exploded, and the resale market is at an all-time high. In 2019, the resale market was about $6bn globally. It’s estimated that it could reach about $30bn by 2030. What I think is driving this category is that it resembles many other traditional collecting categories like jewellery, watches or fine art, because ultimately, sneakers have an element of design, craftsmanship and quality. At Sotheby’s, we offer two types of sneakers, the game-worn sneakers worn by some of the NBA greatest players, and then there are the models which people are chasing because they’re the red hot,” says Pullan.
For the 277-year-old New York-headquartered auction house, the writing was already on the wall when it decided to dwell on categories like sneakers that traditionally appeal to an audience aged 40 and below. Last year, Sotheby’s introduced its first-ever hip hop auction where a signed Biggie K.O.N.Y. (King of New York) crown hammered for $594,750 and The Wall of Boom installation by DJ Ross One fetched $113,000. That auction notched $2m, around 20 per cent higher than Sotheby’s itself estimated.
The luxury division, managed by Pullan, was created a year ago and incorporates jewellery, watches, wine and spirits, 20th-century design, handbags and accessories, sneakers, books and manuscripts, as well as autos. “Last year, the luxury division did around $650m worth of sales. The biggest category in the entire division was the jewellery business – we had sales in excess of $310m. And our watch business was the second largest, [followed by] wine, design and books. But jewellery takes up the lion’s share of the revenue.”
There are interesting insights to gather from Sotheby’s performance within the jewellery and watches category. Thirty-five per cent of the buyers within the jewellery category were new to Sotheby’s, an increase of 32 per cent from the year prior. It could come as little surprise that 90 per cent of the jewellery lots sold in 2020 went to online buys, double that of the previous year. The Cartier Tutti Frutti bracelet sold for over $1.3m in May last year, becoming the most expensive jewel ever sold in an online auction at the time, but was followed by other star pieces later in the year including a 102.39-carat D Colour Flawless Oval Diamond that sold for $15.7m in Hong Kong in October and a 14.83-carat Fancy Vivid Purple-Pink Internally Flawless diamond that auctioned for $26.6m in Geneva shortly after.
Apart from jewellery, watches are the next biggest performer within the luxury division. Global auction sales of watches at Sotheby’s reached $97.5m in 2020. Over 140 online sales netted $47.4m year-to-date – almost eight times the number of sales and five times the value over 2019’s watch sales. Covid-19 notwithstanding, demand for preowned luxury watches remained robust. In 2020, Sotheby’s first-ever online sale dedicated to pocket watches gathered $9.1m.
The momentum carried over into this year as well. In Sotheby’s Geneva Luxury Week sale in May, across a series of six auctions dedicated to jewellery, watches, handbags and sneakers, it attracted sales worth $70.2m, over 14 per cent more than the last season. In Geneva, its jewellery sales commanded $61.5m, followed by $9.9m in watch sales (a 1990 Patek Philippe Ref 3974 in yellow gold achieved $390,000). Meanwhile, an Air Jordan 1 worn by Michael Jordan in his rookie season fetched $151,544. Interestingly, nearly a third of the buyers in the Geneva sale were first-time bidders at Sotheby’s, and 50 per cent of the overall number of participants were under the age of 40. Pullan’s decision to push new product categories within the luxury division that appeal to this younger mindset seems spot-on. “Half of the bidders we had overall were under the age of 40, but yet the average item value was $200,000,” notes Pullan, emphasising that a younger audience doesn’t necessarily imply one with smaller wallets. “The younger audience is something which is a critical focus for us in the broader luxury group. We are really
focused not only on cross category presentations, but also how do we make Sotheby’s more relevant and approachable for new audiences,” explains Pullan. To make Sotheby’s attractive and ripe for those new audiences, Pullan realises that he has to go beyond pushing new products categories, and recalibrate the way the auction house reaches its audience itself. To that end, Sotheby’s introduced an online platform called Buy Now last December, that offers items for instant purchase rather, than via the traditional bidding route. “We offer over 5,000 items that are available for instant purchase. The reason that we wanted to create this platform was to meet the needs of our clients 24x7, as opposed to episodic auctions which is an event-based business. We now have the capability where clients can come and shop or collect all day, every day,” says Pullan. The platform which went live in the US at the end of last year, began shipping to 75 countries in the first quarter of 2021.
Loosely modelled on the fashion world’s ‘see now, buy now’ principle, Sotheby’s enviable collection of products can be instantly purchased without having to worry about counter bids via its digital Buy Now platform. And while it may be an entirely new experience for many collectors to swipe their credit card online for a $100,000 Sam Saidian Emerald Diamond Ring, Pullan is keenly aware that the average selling price of items on the platform demonstrates the appetite to consume luxury today via digital platforms. “Our average item is around $10,000 on the platform. I spent 10 years building and developing our digital business out of New York. We’ve seen a 600 per cent increase in our online sales by value in the luxury [division] last year.”
Overall digital adoption among its clients has been booming over the last few months at Sotheby’s. Within the jewellery category, for example, over 47 online sales took place last year digitally realising $69.2m – double the number of sales and almost eight times the value for 2019. The highest bid placed on its app was $3.8m for a 12.38-carat pear-shaped pink diamond ring. At its Geneva Luxury Week sales in May this year, over 75 per cent of participants in the live sales placed their bid online.
He adds that part of the digital strategy also involves using the right tools to connect with its audience, and it’s these tools that differ from one country to the next. “[We have to] use the right digital tool. So [for example] we have a WeChat programme in China, and it's a great way of reaching our audience, to have content and to speak in the local language, culturally as well.” Apart from building its digital platforms and reach, having physical spaces for its auction isn’t something that is being ignored at Sotheby’s. To that end, it opened what it called The Emporium in the lobby of its New York City HQ in May, which is considered a physical extension of the Buy Now platform. “The Emporium is focused on how do we capture the traffic that’s coming into our New York headquarters, and help make them aware of our Buy Now business. This is a window into our digital marketplace, using our physical footprint to bring people into it. It is our first omnichannel retail store,” explains Pullan. The Emporium invites one leading guest curator to determine which items from its Buy Now marketplace go on physical display. Over May and June, it invited Gucci Westman to curate her selection of items which included a $95,000 David Webb gold, platinum and diamond necklace, a $30,000 stainless steel Rolex Submariner, and even a Porsche 356 as its centrepiece. Apart from The Emporium, Sotheby’s other global physical display spaces include the East Hampton gallery, another one in Palm Beach and also a London New Bond Street gallery dedicated to direct purchases.
A major focus for Sotheby’s is to ensure that counterfeits do not make their way into its portfolio. In its watch category, for example, ahead of the Geneva Luxury Week Sotheby’s collaborated with Swiss major watch and jewellery retailer Bucherer on the physical display of its merchandise ahead of the auction. “We had displayed some of the property from our auction in their flagship stores in [Geneva’s] Rue Du Rhone. They also offered a number of their watches as part of that Geneva Watch Auction that came from their certified pre-owned programme, which is a guarantee that the watch is not just authentic, but that it’s been serviced, that it comes with a two-year service warranty and that the parts are from an authorised dealer.”
Sotheby’s like other auction houses around the world has also in recent years been forced to navigate the sticky subject of restitution. It’s a topic that Pullan doesn’t shy away from. “We’ve operated at the top for over 275 years. And part of that is because we take all of these things – ethics and understanding ownership and restitution very seriously. In fact, we have a department in house, which is a restitution department to make sure that we only sell items where we have clear title and provenance, even if those ownership records go a very long way back. The restitution department is focused on making sure that if there is a title claim or dispute around an item, it is investigated and that it’s absolutely okay to be sold.” Luckily, proving provenance of a $1.8m pair of sneakers worn by a billionaire musician is hardly ever going to be a challenge.