A respected auctioneer since 1793, Bonhams has long trailed behind bigger rivals Christie’s and Sotheby’s. But with a new £30m auction house and a focus on technology and international expansion – while maintaining the personal service – that gap could be going… going… gone!
Walk through the entrance of the newly refurbished Bonhams HQ on New Bond Street in London and you’ll be struck by the meeting of technology and tradition. Reception staff tap away at shiny Macbooks as they answer enquiries while, beyond – in a cavernous new auction space of sweeping oak floors, huge windows and state-of-the-art lighting – upcoming sale items are on display. This morning, one visitor with iPad in hand is moving between George II tables and Queen Anne cabinets, beneath a wall that can come away to reveal a giant video screen. It’s Downton Abbey meets digital age and a fitting snapshot of just how far this famous old auctioneer has come in recent times.
The new £30m auction house, opened by London mayor Boris Johnson last October, has already hosted headline-grabbing sales that will have made uncomfortable reading for bigger competitors. In December, Bonhams sold a portrait by 18th-century French master Jean-Honoré Fragonard for a staggering £17.1m – a world record for the artist and the highest price paid for an old master painting at auction in 2013. By the end of the year the company’s revenues had risen to £127m, up almost a fifth on 2012, and adjusted operating profit hit £25m – more than double the previous year.
When Matthew Girling, chief executive UK and Europe for Bonhams, greets Director he is clutching a print-out of an email he sent to staff on 6 December last year: “It reflected on just one week of sales here in the UK where, from Sunday through to the Friday, we’d sold virtually £50m worth of items from motor cars, to pictures, to jewellery across our salerooms, including Edinburgh, Chester, Oxford and here,” he says. “That one week’s turnover is way in excess of what the annual Bonhams turnover was in 2000. I suddenly thought, ‘this is an altogether different beast I’m driving here to the one I rejoined in 1996.'”
Bonhams can trace its history back to 1793, when respected antique print dealer Thomas Dodd founded a firm in London to sell print collections. The Bonham name became associated when George Bonham, whose family had links to Dulwich Picture Gallery, went into partnership with Dodd’s successors in the 1850s. By then the firm had broadened its interests to include paintings, metalware and jewellery. The Bonham family took over outright in 1879 and, by the end of the century, was building a reputation in a range of specialisms, including porcelain, furniture and fine wine.
But the recent history of Bonhams truly began when the current chairman, Robert Brooks, led a consortium to buy the company in 2000 – ending five generations of Bonham family leadership and launching a new era of remarkable global growth. The youngest post-war auctioneer at Christie’s at just 19, Brooks had risen to board level before launching his own company – Robert Brooks Auctioneers – in 1989. In 2000, he merged the business with Bonhams to create the fourth-largest auctioneer in the UK, before acquiring third-placed rival Phillips Son & Neale in 2001. The following year, the new-look Bonhams acquired Butterfield and Butterfield, the leading auctioneer on the west coast of the US.
“The foundations built by the Bonham family were fundamentally very good,” says Girling. “People loved doing business with us, I think they felt looked after, they felt cared for – the private bank versus the big multinational kind of analogy. But we were just UK based and very small, and our competitors had become international from the Seventies onwards. That was a boat that we’d missed – we’re now busy catching up, doing it quickly, and enjoying ourselves.”
And, says Girling, it is Brooks’s clear vision for the business that has allowed the board to make investment decisions fast – and with confidence: “He didn’t come in with any vision other than competing at the highest level across all areas of our activity. It makes my job as chief executive a whole lot easier because I don’t have to refer back and say ‘is this where you want to be?’ I can question every decision by ‘does this take the brand forward and enable us to compete at the highest level?’ If it ticks that, I know I can push forward with it.”
One such decision came in the firm’s web strategy, as the speeding up of online connections in the mid-Noughties brought internet auctioneering to a widening audience: “There were many providers producing the technology to do online bidding who wanted to create a community where various auction companies could be accessed through a single website,” explains Girling. “We took the decision very early on to say, ‘No, this will be produced by us’. So we have our own, tailor-made auction system [at Bonhams.com]. There was a cost attached, but none of us for a moment questioned the value of that investment.”
It’s a decision that is paying off – in 2013 Bonhams received 58,094 online bids totalling £300m. Not all, of course, turned out to be the winning bids in their auctions but, crucially, the company calculated that a quarter of all bids it receives are now made online – and that 23 per cent of those bidders had never registered to bid with the company before. “The curious thing is, it’s not denuding from bidding in the room, or on the telephone – we can see that these people are completely new to buying at auction,” he says.
The decision to spend £30m on the New Bond Street HQ, says Girling, was also essential for future-proofing the business against changes in the auction market: “It was all paid for out of our earnings – we didn’t go to the City or borrow money,” he explains. “The quality of what we put out in future, in terms of video, internet and so on, will be a key differentiator in how people assess the quality of the auction house,” he adds. “Behind us here, although you see it set out with fine English furniture today, is essentially a television studio – it has cameras and state-of-the-art sound and lighting, so that if we’re broadcasting from there it looks beautiful. I think we have to accept the fact that we are now part of the broadcast media.”
It has also meant that Girling, who still regularly steps up to the rostrum as head of the jewellery department, has had to evolve his auctioneering skills. “Now I’ll be looking down the camera, looking the person in the eye and saying ‘it’s against you online’ or ‘one more click, sir, and it could be yours’. We’ve had to learn a different language,” he says. Meanwhile, bidders in the New Bond Street auction room itself can now also appreciate the tiniest sale item in detail thanks to the huge screen looming behind the auctioneer during the sale.
If there was any boardroom hesitation over a green light for the revamp, a major outside – or rather underground – factor accelerated action: “We were pushed into making a decision much more quickly because of Crossrail [the new 73-mile railway line connecting central London with destinations in the south-east],” says Girling. “Underneath us right now the Bond Street platform is being built – had we delayed much longer, we wouldn’t have been able to do any building on this site for a very long time.”But while Bonhams is now reaping the rewards of its swift investments, growth hasn’t been without its challenges, not least when the company acquired bigger rival Phillips in 2001.
“Inevitably there were people who felt they were the bigger brother to Bonhams,” says Girling. “For example, there was a jewellery department and picture department at both, and bringing those together was not an easy task. I remember very clearly walking into the jewellery department and saying ‘I’m here now, and that’s my desk over there’. It’s jolly difficult – those first six months were very hard indeed.”
So how did Bonhams overcome this, and keep up the company’s philosophy of a personal service for customers as it grew? “That’s an easy one to answer – we’ve kept a very flat, thin management structure,” he explains. “And, other than our finance director, we’re all specialists – Robert is a car specialist, and I’ve been a jewellery specialist for 30 years… We all understand very clearly the issues that the specialist heads of department face. We have always been an auction company run by auctioneers and we are, and will continue to be, very much that.”
It was the specialists who took centre stage when the company felt the effects of the financial crisis: “The years 2008 and 2009 were difficult, without a doubt,” says Girling. “How do you get through that? It’s about ensuring, whatever you do, you retain your specialist departments – even if you have had to take a haircut to your support departments which, of course, we had to do at the time. In certain specialist areas, the talent pool is very small – it’s not like advertising for an accountant and knowing that ‘x’ number of people will apply for the position. It’s extremely important to us that there is a career path and that our home-grown specialists are nurtured from the shop floor upwards. We ensure that we really look after them.”
The crisis also brought focus to the expanding international side of the business. “At the time the buzzword was that there would be a burgeoning auction market in the Middle East – Dubai specifically,” says Girling. “But the market turned and, though we retained an office, we stopped having sales there. That was deliberate because it was very clear to us that the Far East, particularly Hong Kong and China, was going to grow much more quickly and it would be better to direct our management resources towards building the business there and in the US. An increasing number of our buyers are from mainland China and that has to be, for us, the most exciting path in growth terms.”
Today, Bonhams has offices in 25 countries spanning 60 specialist departments, with major salerooms in Paris, Hong Kong, Sydney, Los Angeles, San Francisco and New York. “We’ve built leading departments in Britain – our jewellery, ceramics, Russian and old master picture departments, for example, led the way last year. But we have still got to do that in some of the core areas in the more traditional markets, both here and in New York, so that’s work still to be done,” says Girling. “Regarding our salerooms, the same architect [Lifschutz Davidson Sandilands, which worked on the New Bond Street revamp] is looking at transforming our Madison Avenue saleroom in New York, and work is also under way in Hong Kong, which will be finished for our round of sales in May.”
While commission taken from the buyer and seller remains the company’s principal source of profit, Bonhams is hoping its revamped auction houses will bring in new streams of income. A fine-dining restaurant is planned for New Bond Street, featuring vintage wines selected by Bonhams wine specialist Richard Harvey. It’s not hard to imagine the revenue-generating potential of hospitality surrounding the most glamorous auctions – last year Brooks brought down the hammer on the most expensive car ever sold at auction (Juan Manuel Fangio’s 1954 world championship-winning Mercedes F1 car, for a cool £19,601,500). And Girling was on the rostrum last April to sell a rare deep-blue diamond for £6.2m – a per-carat world record. Who wouldn’t want a calming glass of wine after that?
“It’s an enormous thrill. You get nervous, of course you do, but it’s the best part of my job,” he says. “I returned here [after a spell at Christie’s] because I really felt I could help build something. It’s been a wonderful challenge and there is still much to do. And, for me, being on the rostrum still gives me a real feeling of what’s happening in the market. That’s why, from my perspective as chief executive, it’s really important that I’m still up there taking those sales.”