With assets of $23 million at the close of its most recent fiscal year (on Mar. 31, 2016) and a smooth transition to a new CEO, Robert Walton, in July, it might seem as if the National Association of College Stores is in a strong position. But like publishers and other players in the college market, NACS has been roiled by dramatic changes in higher education. Behind its solid financials are signs of weakening in the face of changes in the collegiate book market, including a decline in the number of independent campus stores.

Though independent trade bookstores have been growing since 2010, the picture for campus stores has been less rosy. Last year alone 92 independent stores signed with lease operators, including the store at the University of Connecticut—which ditched the UConn Co-op, founded in the 1970s—and the 100-year-old bookstore at UNC Chapel Hill, both of which signed with Barnes & Noble Education. The number of private college stores has dropped too, from 447 in 2012 to 367 in 2016. Many schools have turned to leasing to relieve the headaches of operating a physical store, particularly at a time when more and more students are shopping online, as well as in the hopes of getting a better financial return.

“We get an F, if our goal is to retain independent stores,” said Walton at the association’s annual business meeting and town hall, which took place at Camex (Campus Market Expo) in Salt Lake City from March 3 to 7. “We’re losing a store every four days.” Currently there are about 2,000 indie stores. If the association doesn’t take action, Walton predicted, the situation could reach a tipping point in less than a decade. By his calculations, leased stores may significantly outnumber indies as early as 2025.

Already NACS is starting to feel a financial pinch from the drop in indies, 360 over the past five years. With the loss of independent campus stores, the Camex trade show, one of its largest moneymakers, has seen a corresponding decline in attendance and exhibits. This year, the number of attendees dropped from 1,916 in 2016 to 1,641; the number of booths from 1,476 to 1,152. These drops—coupled with a softening at its shipping subsidiary PartnerShip, a dip in membership dues by more than $100,000 last fiscal year, and a forced 17% staff reduction in September because of a $30 million loss in revenue at its NACSCorp distribution subsidiary—have further strengthened NACS’s resolve to fight, a word used frequently throughout the show.

“We shouldn’t hand over the industry to Follett and Barnes & Noble [Education] without competing,” Walton said. He and NACS members are concerned about affordability and reports that students who shop lease-operated stores pay more for textbooks than other students. “We’re going to start fighting back, and we’re going to make clear the value of independents,” he said. At a megasession the following day, he elaborated on how the organization intends to do that by announcing that it is redefining the mission of its four-year-old IndiCo subsidiary, which will become a collaborative. Previously IndiCo had served primarily as a consultant for indies, and it will now play an active role in assisting school stores, including taking on the tasks of a lease operation while keeping the campus store under the institution’s control. As part of the transition, the functions of NACS subsidiaries Connect2One, which enables stores to buy merchandise collectively, and NACSCorp will be absorbed by IndiCo.

NACS also announced several key partnerships that will enable it to help institutions, including one with Amazon (which Walton does not regard as the enemy) and Amazon’s newly launched textbook wholesale service. Among others partnering with IndiCo are Akademos, Ingram VitalSource, RedShelf, and Sidewalk. In an interview at the show, Walton stressed that IndiCo plans to be “promiscuous” when it comes to recommending vendors to institutions. They will be able to choose the services they want and partners that will deliver them, unlike many lease operators, who prefer to lock up vendors even if they’re more expensive.

Even before the announcement was made publicly, IndiCo had begun responding to requests for proposals put out by institutions. This year NACS hopes to have eight stores using IndiCo’s services, Walton said. Although most of the planning around the relaunched IndiCo has been to help small- to medium-size stores, he noted that he’s been surprised by how much big stores would like to participate. In early conversations, large stores have been particularly interested in a global supply chain program that NACS is looking to launch in the fall, which will enable members to source products globally. The association has already opened an office in Shanghai.

So far the response to the relaunched IndiCo has been positive, although admittedly Walton was speaking to the converted at Camex. “I was very excited to hear NACS’s timely announcement about IndiCo,” said Debbie Harvey, managing director of university community services at the University of British Columbia. “Our industry is changing rapidly. We need to support the independent bookstore’s contributions to student’s academic success and the vitality of their campuses. The new IndiCo will provide tools and services to help all stores remain viable and continue to contribute to their campuses.”

Janet Huebner, store manager and textbook services director at Wartburg College in Waverly, Iowa, noted that the announcement provided a lot of fodder for conversation at the show. “It is exactly this type of leadership that is needed to stem the loss of independent stores,” she said. “IndiCo’s ability to evaluate need store by store will provide a professional and updated model of what a college store should be. In addition, IndiCo will be a crucial consultant to educate college administrators on the negatives of going lease.”

Speaking for the Harvard Coop at Harvard University in Cambridge, Mass., which has a business relationship with Barnes & Noble Education, president Jerry Murphy called the IndiCo initiative “a terrific option and resource, particularly for small and medium stores. It gives administrators another option which should be more efficient [and] localized and keep the resources within the independent bookstore ecosystem.”

A Time of Change

The ideas that college retail is changing and innovation is required were woven into many of the presentations during Camex. Incoming NACS board of trustees president Loreen Maxfield, director of retail operations at the University of Illinois at Chicago, made change the theme of her talk—and linked it to Barbie. “We too need to remain relevant in a changing environment,” Maxfield said, noting that Barbie has gone through 150 different professions and run for president six times. Like Barbie, she added, collegiate retailers need to make change work. “NACS cannot do this alone. What needs to be done is not easy. We are fighting to survive.”

Change, particularly consolidation, was also apparent on the show floor. At the MBS booth, staff fielded questions about what its recent purchase by Barnes & Noble Education will mean for campus retailers. Verba, a pioneer in price-comparison software, was near the Ingram VitalSource. The two will merge at the end of the quarter as part of VitalSource’s drive to enter the independent market. VitalSource supplies the technology for Follett and B&N Education and is about to begin powering Chegg’s digital platform.

Follett Higher Education used the show to unveil its integrated textbook marketplace tailored to the college bookstore industry. As executive v-p of sales operations for Follett Clay Wahl noted, it offers sourcing, rental, management, buyback, and liquidations solutions and is based on the company’s 2016 acquisitions of BookVolume and ValoreBooks.

The week of Camex, Sidewalk, which has transformed into a tech company in recent years, marked its exit from supplying physical textbooks through its separation from CampusBookRentals.com. “[Providing physical books] is not fundamentally what we’re doing right now,” said Sidewalk founder and CEO Alan Martin. He was excited that IndiCo has moved from the role of an observer to an advocate and will be making some of the company’s tools available through their partnership, including Sidewalk’s price comparison software Hero. By the end of the year, Martin anticipates having 200 schools live on Hero.

With so many mergers and acquisitions dominating the show, RedShelf cofounder and CEO Greg Fenton noted that his company has no intentions of seeking a buyer. It is flush with cash after raising $4 million from investors, including NACS, last fall. RedShelf, which competes with VitalSource, currently dominates the indie market in digital, serving 540 stores, and has begun to enter the for-profit market, long dominated by VitalSource.

Correction: VitalSource will acquire Verba at the end of the quarter. At Camex, the merger hadn't yet taken place. The two companies had booths near each other, but not together.