WHEN Michael O'Mahony was hired as president and chief executive officer of Wentworth Gallery, he walked up and down the poshest streets of Boston and Miami visiting small, exclusive, privately owned art galleries. He wanted to learn what not to do in running a fast-growing chain of galleries that would cater to art connoisseurs and novices alike.
The first thing he discovered was never to sell art as an investment.
"I'm not wise enough to foretell the future of a particular artist," Mr. O'Mahony says. "I can tell you what's good art in my opinion, what is quality art in a technical sense, but I cannot tell you what is going to increase in value or not increase in value."
On the other hand, Fidelity Capital, the new-business development arm of one of the nation's largest mutual fund management firms, Boston's Fidelity Investments, predicted that Wentworth would make a good investment and was willing to bet it would become increasingly profitable.
The Boston-based financial group bought the company with the intention of "growing it," and it has grown.
Beginning with six galleries in Massachusetts and Florida in 1989, there are now 37 Wentworth galleries in 15 states. Revenues in 1992 were more than $15 million.
But "it's not just willy-nilly opening stores," O'Mahony says. "The growth is slowing down now that we've gotten to where we want to be."
Wentworth represents 35 to 40 artists and each gallery displays about 250 pieces of art. Customers can buy a painting for $400 or $45,000. They come to the gallery knowing a lot about art or next to nothing. And if they are looking for a particular artist or painting that Wentworth does not have, the company says it will find it for them.
"The fact that we are a chain allows us to be tremendously diverse in our selection, to give the client better value because of the buying power we have when we negotiate with an artist," O'Mahony says. "A traditional gallery will go to an artist and buy one or two of his or her pieces. If I think an artist is talented ... I can buy everything that artist can paint." Private dealers struggling
This is a luxury that most galleries do not have, says Donna Carlson, director of administration at the Art Dealers Association of America in New York. Since the art market peaked in 1989-90, small dealers have been struggling, she says. Some have tried to cut overhead. Others have simply shut down.
"Most art galleries are private businesses, more like Mom-and- Pop stores," Ms. Carlson says. "They have had to survive on the taste of one or two individuals."
Because most are private, there is little public disclosure of finances among art galleries. But in 1989 it became obvious to Fidelity Capital that the market was in trouble and therefore it was a good time to get in, says spokeswoman Karen Ernst. Wentworth had what the firm looks for in a business: an interesting concept, good growth potential, and a wider market that no one else was serving adequately.
"We realized Wentworth had a good market niche, that the art market was very fragmented, and that we'd be able to grow the business," Ms. Ernst says. "We will often get into a business where the cycle seems to be working against us, but if we get in at the right time ... we can do very well."
The fact that the retailing economy has been doing poorly has also worked in Wentworth's favor, Ernst says.
Malls that were impossible to get into six or seven years ago are now hanging out "For Rent" signs on a regular basis. And since the housing market has been slow, more people are redecorating their homes rather than moving to new ones, O'Mahony says. Widening the market
Wentworth counts on the fact that most everyone, at some point or another, goes to a mall. "A lot of people are intimidated by single galleries located on Newbury Street [in Boston] or Worth Avenue in Palm Beach," Ernst says. "People feel comfortable in a mall."
Wentworth has relied on more than a love of good art: It depends on a sharp business sense.
"We have expanded in this market because we ... service our clients," says David Swan, vice president of sales at Wentworth. "We listen to what customers want and then we provide them with the services that they're asking for."
Having financial backing does not hurt either. Fidelity Capital has the capacity to continue expanding Wentworth, letting it grow until the economy improves, Ernst says.
"We have the resources that an organization like [Fidelity Capital] can offer us," O'Mahony says. "Yet we can still have an entrepreneurial spirit. As far as I'm concerned, it's really the best of both worlds."