When Camex, the annual trade show and educational conference of the National Association of College Stores, opens in San Antonio, Tex., on February 22, it will be shorter and more focused on content than in years past. But a reboot of the annual gathering is just one manifestation of the changes roiling the college store market and NACS due to declining textbook revenue. Since Robert Walton was named CEO in 2016, the association has shifted course to strengthen its 1,204 member stores, largely through its IndiCo subsidiary. Other independents, along with Barnes & Noble College and Follett Higher Education Group, are also adapting to stay relevant and ensure student success, with the latter announcing last year that it would invest $50 million in its e-commerce platform.
Digital course materials such as OER (open education resources) and inclusive access (which ensures that students get course materials at the start of classes and bypasses the campus store) have caused textbook sales to migrate from a gross margin business to what Jerry Murphy, president of the Harvard Coop in Cambridge, Mass., describes as a commission model.
Free materials—borrowed, shared, or downloaded—are also eating into textbook sales. According to the NACS Student Watch biannual survey of the 2017–2018 academic year, the share of students using free materials went from 19% in spring 2016 to 32% in spring 2018. On average, students spent $484 each on nine required course materials, down from $579 on 10 units in 2016–2017.
Raj Kaji, CEO of Akademos, a course materials solutions platform that offers colleges and universities a virtual option for their campus stores, predicts further erosion. “We believe that in five years, on-campus retail sales of course materials will cease to exist for many institutions,” he said. “The economic forces behind the change are unavoidable.” For him, the role of physical campus stores will be to provide emblematic wear and services.
Campus Stores Pivot
With declining textbook sales, many campus stores have shrunk the space that they devote to course materials. “While we definitely see a bit of downsizing of our textbooks department, we see that as an opportunity,” said Lisa Malat, COO of Barnes & Noble College. “We’re looking at new models to create more lifestyle areas and concept shops.” Concepts, or boutiques, range from wellness to single products such as Champion apparel. Emblematic products, Malat noted, continue to drive “significant revenue” for B&N College stores.
B&N is changing fixtures and moving departments to turn stores into what students want: “a campus living room”—with services—Malat said.
Jonathan Shar, senior v-p of revenue and product development at B&N College, said that the company’s stores provide support for students and faculty in a physical place on campus. It currently manages 1,450 physical and virtual stores, including 677 MBS Direct stores.
The Coop, which has long partnered with B&N, is rethinking its 90,000-sq.-ft. flagship store in Harvard Square. “That’s the age-old conversation, ‘How much space do you need?’ ” Murphy said. He’s already had a chance to examine what’s essential to a campus store at the MIT Coop in Kendall Square, Cambridge, which he also oversees. Earlier this month, construction forced the 35,000-sq.-ft. store to relocate temporarily into a space one-fifth the size. Trade books is among the departments Murphy was forced to cut.
Follett had a “record-breaking year” in 2018 in terms of renovations, with more than 100 taking place in a three-and-a-half-month period, according to senior v-p of retail operations and course materials solutions Jennifer Hatton. Although Follett has reduced its footprint for course materials, they continue to drive sales online for the company, which was the first to introduce a buy-online-and-pickup-in-store option in the mid-1990s.
“We have a very unique codependency,” said chief digital officer Roe McFarlane, noting that about 50% of online sales result in an in-store pickup—70% during rush.
Follett is continuing to innovate in the e-commerce space and will launch its mobile-first e-commerce platform this April or May to its 1,522 virtual stores. Another 300 athletic sites, which it gained through its acquisition of Advanced-Online, will migrate to the new platform later this year. Although Follett’s investment has been massive, what especially excites McFarlane is what the company will build off of it. “It’s not just the selling of things,” he said, noting that 25% of Follett’s retail business is online, “but of services like accessing a tutor.”
At Camex, NACS will launch Resero, a cloud-based retail technology built from Sidewalk software, which the association acquired when Sidewalk closed last year. Sold as a monthly subscription, Resero is intended to serve the needs of campus stores at a time when their survival depends on going beyond traditional retail. “The idea of a single silo called a campus store is an antiquated idea,” Walton said. “They need to be service centers. Students just want services.”
Although Resero was introduced in February, and the first six participating colleges won’t install it until March and April, other associations have already expressed interest in offering a modified version for their members. Currently, NACS has a team of 15 developers and six others responding to inquiries.
NACS hasn’t abandoned its efforts to provide full-store management to stave off the loss of independents to corporate management, including the country’s oldest bookstore, the Moravian Bookshop, founded in 1745 in Bethlehem, Pa., which has been managed by Barnes & Noble since becoming a college store last year. Still, Walton said, leasing has slowed from one store every three to five days in 2017 to one store every 10 to 12 days.
Despite the digital push, some stores remain committed to print. “There really is no role for bookstores as intermediaries in providing e-content: the nominal pass-through fees that bookstores can collect on e-sales certainly will never pay rent,” said Dorothea von Moltke, co-owner of Labyrinth Books in Princeton, N.J., an academic bookstore that serves as the official bookstore for Princeton University. “Once we give up our commitment to the physical stores, we stop being booksellers,” she said. To stem declines in coursebook adoptions, and to make course materials more affordable, in 2012, Labyrinth partnered with Princeton to discount textbooks 30% across the board, selling them roughly at cost.
“We’re still selling books,” said Louise Little, CEO of University Book Store, which has six stores in and around Seattle. But UBS recently reduced the school’s trade book department, renamed it the Book Shop, and consolidated it from two floors down to one. Last year, the store also moved its inventory management to Oracle’s NetSuite. “For the first time, we’ve had our website integrated with our enterprise system,” Little said. “What we’re seeing is much more customer engagement.”
To encourage students to come to the store and to build community, UBS, which holds frequent book events, added a number of nonbook ones, such as watercolor classes and “Appy Hours,” where students can learn how to access or use certain apps. It also offers shipping and Apple repair, and it partnered with Bed Bath & Beyond last fall to offer some of the chain’s products.
Seminary Co-op Bookstores, with two stores in Chicago (Seminary Co-op and 57th Street Books), is 99.1% books, according to director Jeff Deutsch. He would like to see campus stores that have moved away from books “course correct” over time. He said that there’s definitely a desire for academic bookstores, because he is contacted by faculty and administrators from other colleges about six times per year to open branches on their campuses.
Though others see the future of college stores tied to services, Deutsch calls the academic bookstore “a cultural institution disguised as a retailer.” Whichever view prevails, it’s clear that the concept of the campus store as a revenue generator is changing.