"We think the August pop is done. It’s a different world,” said Mark Mouser, manager of general books at University Book Store in Seattle. He’s not alone. With Barnes & Noble College Booksellers, Follett Higher Education Group, and Nebraska Book Company all pushing textbook rental, not to mention online players like Chegg.com and BookRenter.com, 2010 is shaping up to be the year of the rented textbook. Add to that digital textbooks, which, according to Jade Roth, v-p of Barnes & Noble College Booksellers’ books and digital strategy, are gaining traction for the first time, and college bookstores are facing new pressure to abandon old business models that relied on sales of printed texts.
In August, according to recently released figures from the U.S. Census Bureau, total bookstore sales suffered their biggest decline of the year, down 6.5% to $2.29 billion, driven in part by eroding sales of print college texts. Even the late August release of Suzanne Collins’s Mockingjay couldn’t stem the slide. In each of the last three years, August sales have been up: 0.4% in 2009, 5.4% in 2008, and 9.3% in 2007. Although the National Association of College Stores’ monthly flash report, based on sales at 50 stores, showed flat sales at university bookstores in August, the picture was worse at some campus-related general bookstores. The new Higher Education Opportunity Act (HEOA), which requires colleges to make course lists with ISBNs available at registration, contributed to students looking for the cheapest books possible. Talking Leaves Books, which serves several colleges in the Buffalo area, was one of many college stores to report that students used Blackberries to scan course books, then ordered direct from Amazon at the store, a consumer tactic not unfamiliar to trade booksellers.
As a result of intense price competition, Food for Thought Books in Amherst, Mass., which serves students at UMass and other regional colleges, took what collective member Carlos McBride described as “a serious hit” this fall. The store is now in the midst of restructuring and has been meeting with people in the community to discuss fund-raising strategies. At Brown University Book Store in Providence, trade sales were flat, but sales on the textbook side were down in single digits. “The erosion continues,” said director Steve Souza. “It was the biggest percentage down in quite a bit.” The school plans to implement a rental program for the spring term. “Honestly, the industry is pushing me, not the students,” said Souza, who has had to contend with full-page ads for Amazon in the campus newspaper advertising steep online discounts. Chegg, too, has been targeting schools with grassroots campaigns that include chalking and T-shirt giveaways promoting its rental option.
Wholesalers and college bookstore operators are fighting back with book rentals of their own. The number of stores offering rentals has quintupled to 1,500 this fall. In addition to enabling bricks-and-mortar stores to offer competitive pricing, rentals build foot traffic so stores can sell higher margin items like hoodies, sweatshirts, custom T-shirts, and shot glasses, as Charles Schmidt Jr., director of public relations for NACS, pointed out. B&N College’s Roth confirms that bookstores continue to serve as campus hubs. Many students rent or purchase from their schools’ Web sites, then pick up their orders at the bookstore.
This fall B&N College is offering a rental option at 300 of its 640 campus stores and will roll it out to another 100 in January. It’s also trying to expand its digital sales and began offering free downloads of its Nook Study software to read e-textbooks on Macs and PCs this semester. However, textbook rentals are still relatively small compared to new book sales. On average, Roth estimated, 25% to 30% of titles can be rented. Some students, especially medical students, prefer to own their books. Other impediments to rental include books with perforated pages that are easily removed and books with online components that might not be available to the next user. Faculty also have to commit to using the same book for several semesters.
Follett, which manages 880 locations, has invested $120 million in its Rent-A-Text program. This fall it rented 1.4 million units, including some books for less than the cost of putting them on the shelves, according to Elio Distaola, director of public and campus relations. Currently, 30% to 40% of Follett’s bookstore assortments are available for rent. “While we’ll need a full academic term to deeply analyze success,” said Distaola, “key indicators point in a very positive direction.” It seems clear that institutions that have introduced a rental option have performed better on an overall basis than those without the option.
Unlike Follett and B&N College, Nebraska Book Co., which operates 280 stores and has 2,500 commercial accounts, is giving the stores participating in its NBC Textbook Rental program a rebate. If a $100 textbook rents for $60, NBC gives the bookstore a $20 rebate at the time of the rental and another $20 when the book is returned. “Our program keeps them whole on their gross margin,” said Steve Clemente, head of the retail division, who sees rental as a win-win for students and bricks-and-mortar stores.
Some stores are trying a different tack. “We were surprised at how strong our rush was,” said University Book Store’s Mouser. “But we were a store that tried to offer every option.” Students can buy new books—which still account for 75% of textbook sales—used, digital downloads, and for the first time rent online through BookRenter. Still, Mouser worries that the HEOA will push students away from using college stores. The way students see it, he said, “textbook prices are high; the college store is the incumbent.” To boost book sales, in fall 2009 University Book Store automated its rebate program so that students and faculty can swipe their Husky card to get a 10% rebate in store credit. Nonuniversity customers who have asked to participate can now do so through the store’s readers club. Between the two programs, University Book Store has close to 45,000 members.
The University of Arizona BookStores in Tucson is also trying the full monty approach, even partnering with Amazon. Students can use bursar accounts to purchase books or use kiosks throughout the store to rent from Chegg. “Our partnerships have made a difference in our efforts to keep sales revenue on campus,” said Cindy Hawk, associate director of general books and textbooks. “Students can find their best textbook fit, and we can continue our support of student programs, scholarships, and organizations on campus.”
Still, digital and open-source textbooks could become game changers. E-books now account for 2.8% of course material sales, according to NACS’s Schmidt, who predicted that they will grow to 10%–15% by 2012. Although Flat World Knowledge is currently the only publisher to offer open texts, which allow free digital access and low-cost printing, it is the option of choice of the Student Public Interest Research Groups, headquartered in Chicago. “Rental is a great way to reduce costs in the short term. It’s not a long-term solution,” said Student PIRG’s textbook advocate, Nicole Allen. As she sees it, the role of the bookstore is going to change, and stores like Arizona BookStores and University Book Store, which have Espresso Book Machines, are positioned to take advantage of professors’ ability to customize open-source books. According to Allen, bookstores are moving from being just a part of the supply chain to a producer of content.