During the Follett and Baker & Taylor 2021 Virtual Publisher Summit—which convened on October 1 via Zoom for a second straight year—executives from B&T and parent company Follett offered a market overview of how their businesses have fared during the past year. The discussion skewed heavily toward updates from the Follett School Solutions division, which was recently acquired by equity firm Francisco Partners and which also announced the closing of its traditional book fair operations. Aman Kochar, executive v-p and general manager of Baker & Taylor, told the audience that a second virtual publisher summit spotlighting B&T’s trajectory more specifically is being planned for November, with a date yet to be announced.
The afternoon’s program additionally included input from public and school librarians on a panel entitled Emerging from a Pandemic: What Will Schools and Libraries Look Like? and a subsequent FSS breakout session addressing FSS content strategies, Elementary and Secondary School Emergency Relief funding, and an SEL and diversity analysis tool. (PW will cover these sessions in future articles.)
As the summit kicked off, Britten Follett, CEO of Follett School Solutions Content, moved to address what she called the “elephant in the room” regarding Follett School Solutions’ recent “difficult and extremely emotional” decision to shutter its traditional book fair business, which was launched in 2017. “Our customers asked us to get into the book fair business because they were looking for an alternative to Scholastic,” she said. “What we could never have prepared for was for every school in the country to shut down. Frankly we could not continue to sustain the losses associated with the book fair business for another season. We were at an inflection point where we were going to have to buy more inventory and make additional investments and we were still seeing 50–75 fairs canceled each week. Unfortunately, this fall has been anything but a return to normal.”
She suggested there could potentially be a different book fair model down the line. “We are still exploring what we’re going to do with eFair [electronic book fair] business,” she told publishers. “Our hope is to re-enter the market with a refreshed strategy. Based on your input and feedback we hear from our customers about what the future of fundraising can be associated with books, we know that there is a desire to get books into the hands of kids at home. We feel that’s where eFairs can fulfill a niche that isn’t currently being served well by the providers of content out there.”
Britten Follett confirmed that the book fair program was the most significantly impacted of the FSS businesses during the Covid-19 crisis. “This time last year our content business was down 70% at the height of the pandemic,” she said. “That has rebounded, and we’re now seeing inbound orders at pre-pandemic levels.” From a tech standpoint, she added that “[software platform] Destiny and our other technology solutions were not really impacted by the pandemic at all. So, we run the gamut in the markets we serve: technology was unaffected, content was affected for a period of time, and book fairs were hugely impacted.”
Offering a more general picture she noted, “Schools are back in session for the most part, but it’s changing on a daily basis. The story of uncertainty continues across K–12 school market.”
On the public library front, Kochar commented that the past year has been “a tale of two cities—in certain ways a lot has changed, and in certain ways nothing has changed.” He reminded audience members that public libraries have traditionally been one of the institutions that people turn to in times of adversity. “Public libraries have been going through this identity reformation for a very long time of what does it mean to be a public library and how do they continue to be a trusted source of information and a pillar of the community,” he said. “Strategically, nothing has changed because libraries continue to be that resource that people rely upon,” Kochar noted. “What has changed is the way they access the library, which is sitting at home. We’ve noticed a gradual uptick in libraries making not just their e-books available online, but also some of their programing. There is interest in continuing these service that were born out of a necessity during the pandemic—curbside pickups, sidewalk service, grab-and-go packs. They have become a convenience because they do solve a need for the general populace.”
After a period where the “spend on electronic content was accelerated,” Kochar sees more normalized trends in both digital and physical content. Digital sales are up roughly “15–20% from pre-pandemic levels,” he said. “There’s been a general, gradual shift from print to digital that nobody can deny, but I think it has plateaued.” Kochar points out that print sales have not fully recovered. “At this point, I had expected to be about 8–10% below pre-pandemic levels, but my print sales are about 6.5%–6.7% below pre-pandemic levels. While we’re not back to pre-pandemic levels the good news is the rate of recovery is much faster. I think a lot of that has do with some ARPA [American Rescue Plan Act] funding, the IMLS [Institute of Museum and Library Services] federal funding that has a two-year year lifespan; and the tax dollars allocated after the stub year. All of those things have contributed to the rate of return to normalcy being accelerated.”
In addition to e-book sales being up, Kochar said that e-book circulations are up “north of 40%.” He believes that the combination of virtual programming and content is leading to increased consumption of both electronic and physical content.
“Our entire content business is back to pre-pandemic sales levels,” Britten Follett said. “E-books obviously surged during the pandemic and have flattened out a bit. We are seeing some delays in orders and I’ve talked to many publisher friends who are seeing the same thing. Librarians, teachers, and curriculum directors are delayed in making decisions about this school year. From what we’ve heard from our customer advisory board as well as well as our sales team, it’s due to all the chaos in the market right now. Folks are protesting outside schools about masks, arguing about vaccines, quarantining kids on a daily basis. So rather than making a decision about how they’re going to spend their $5,000 library order, they’re trying to sort through how we get through the school year.” In her view the pattern is shaping up to be similar to last school year. “The orders started coming in late fall into winter, and December ended up being a large surge for us that frankly we’ve never caught up to,” she said.
“We’re as close to normal as we have been in two years,” Britten Follett said, reflecting on how FSS’s businesses are beginning to emerge from the pandemic. “What is becoming part of the new normal is that teachers and students know how to access digital content and they didn’t before. For many years the digital library was out of sight out of mind. Now it’s part of what they do on a daily basis.” As an example, she noted that these days a school librarian will likely not be able to get a new book into the hands of a student in a speedy manner due to supply chain issues. But that librarian “probably can get the e-book very quickly,” Britten Follett said. “It’s a new normal we all need to be cognizant of as we examine what the new lending models are going to be for e-books. Librarians and teachers want unlimited access to digital content. We need to sort out exactly what that looks like so it’s mutually beneficial for all of our businesses.”
Public libraries “are a little shy of being back to normal,” Kochar said. “What’s very interesting to me is the nimbleness or the fluidity that libraries have gained. They are able to continue to expand hours and services even in the face of the Delta variant. It isn’t slowing them down. Over the last year, libraries, like other institutions and industries, created mechanisms, tools, and technologies to cope with the pandemic. Libraries are confident in their abilities that, should things spin out of control again, they have the ability to curb [the disruptions] down as quickly as they can. I’d say we are at maybe the 80–85% mark of normalcy; the last 15% will be staggered based on regions, state policies.”
Navigating Bumps in the Road
Britten Follett named “hiring and the supply chain” as the biggest challenges her businesses are facing. “Moving books through our warehouse has been extremely challenging since last December,” she said. “We offer sign-on bonuses, attendance bonuses, and referral bonuses; we’ve raised our base pay, we’ve changed our incentives in the service center. The problem is we saw a surge of orders in December and that typically would have been a slower time for us. Essentially we’ve never caught up from the pandemic and at any given time we’ve had about 150 jobs open in our warehouse and we cannot fill them.”
Offering a closer look at workforce needs, she noted, “Essentially the funnel of our warehouse is in processing—all the labels that our customers require of their order. It takes a couple of months to get a processor up to speed.” In addition to hiring and staffing, she pointed to challenges with paper and printer sourcing. “We had to source our book fair flyers from multiple printers because they couldn’t guarantee they could print volume that we needed,” she said. “There isn’t an area of the supply chain that isn’t impacted. One of the things I would challenge all of us to figure out is how can we work together to better educate our customers about the challenges we’re facing. The reality is prices are going up on things and we can’t move things through the warehouse as expeditiously as we might have in a pre-pandemic world. What can we do to get orders to them in a faster manner that is satisfactory to their needs?”
At a customer advisory board meeting at FSS’s McHenry, Ill., offices held last week, “every librarian in the audience said they would be willing to process their own books if we provided the entire kit for them,” Britten Follett said. “That’s not scalable in a 50,000-book order. It might be scalable in a 5–10 book order. How can we educate our customers that this is going to be a situation that we’re going to be in for some time? A return to normalcy in our supply chain isn’t coming tomorrow.”
Kochar noted that B&T faces similar difficulties with hiring and supply chain issues, including shifting transportation and material costs. “Getting people in the door and then getting them to work long enough for us to invest in them so they can learn the work and become productive at the highest levels—it’s a knuckle fight.” He thinks the situation will improve when other areas of people’s lives return to normal and they may be more open to working a second job at a service center. “We are advising our customers to be patient and to order earlier,” he added, noting that B&T maintains biweekly communication with its customers to help them with various aspects of ordering.
The Sale of FSS
Answering a question from the summit audience, Britten Follett shared more details about her business unit’s sale to Francisco Partners. “Coming out of the pandemic Follett Corporation realized that with digital at a precipice, FSS was ripe for growth and needed additional investment,” she said. “We initially sought equity partners to invest in our business and those conversations really turned into how it made the most sense for FSS to separate from Follett Corporation. It was a highly emotional six months going through this process for me as a family member as well as the leader of the business. But I have to say that Francisco Partners is a great owner because they know the business and the K–12 space.”
One reason that Britten Follett said she is pleased with the new arrangement is that “Francisco Partners recognized that we have great brand recognition, we’re in the majority of K–12 schools, and that content and technology work better together. Our content is delivered through our technology and our technology is only as good as the content that we’re pushing through it.” She says that “it’s business as usual,” as FSS separates from Follett Corp and becomes an independent business. “As we’re doing that we are focusing on our strategic planning,” Britten Follett said. “There isn’t a day in meeting with my board that growth isn’t mentioned. We have to figure out how growth is going to happen. Is it organic? Is it moving into new markets, or is it through mergers and acquisitions? All of those things are on the table for the first time.”
Going forward, she told the publishing partners in the audience, “I’m interested in hearing from all of you. This is a new era for FSS. Just because we haven’t done something in the past doesn’t mean it’s not on the table today. Come with your ideas. The world has changed since we started this conversation, and all of our businesses are ripe for transformation. As FSS grows, you all benefit.”