Thank you to the college store managers who contributed their thoughts and expertise to this post.
Recently Clackamas Community College signed a contract with Barnes & Noble that can be adopted by other Oregon colleges as-is, despite librarian concerns about academic freedom and access to open educational resources, documented in A Barnes & Noble Experience and Let Us Get You Into College: Community College Librarians, Barnes & Noble, and OER (link to CCC contract; see pp. 27 and 33 for language that enables as-is adoption). Other Oregon colleges are considering a similar switch as administrators seek affordable means to offer the service of an on-campus college store. This post explores how the movement for affordable textbooks is having an impact on college store models in Oregon.
Background: A catch-22 for college stores
The move to outsource college stores can be seen as a direct result of reduced revenue that, in turn, can be traced back to efforts to lower the cost of course materials. When Amazon debuted, along with alternatives like half.com, Chegg, and the like, students began to have powerful tools for comparison shopping. Institutions have now caught up and are actively working to lower costs, whether through inclusive access models, grants to support the use of open educational resources, or other affordability programs.
The environment for campus stores right now is a tough one. Not only are they competing against workarounds that students take to deal with the artificially inflated commercial textbook market, but also more and more courses assign no-cost and low-cost alternatives. When bookstore managers succeed in reducing costs for students, they hurt their own bottom line and may miss general fund contribution targets into the bargain. This leaves independent campus stores vulnerable to being outsourced unless we are willing to reimagine the service that they provide.
Store manager perspectives
National organizations like Student PIRGs, and local campus student governments, have done an excellent job of clarifying the student perspective on rising textbook costs. Faculty have senates and unions to convey messaging about academic freedom and best practices for evaluating quality of materials. Campus store managers, on the other hand, have not been heard as loudly. It’s worth considering their perspectives, since they see the problem from the front lines.
Most campus stores are expected not only to cover costs, but also to send revenue back to the general fund. Even though it’s an essential service for students to have a way to find and purchase their course materials, this service is often set up as a self-supporting retail operation that also contributes to the institution’s overall bottom line. Store managers therefore have to balance student needs against the store’s profitability in order to continue providing this service.
In Oregon, growing awareness that the steep increase in commercial textbook prices is unsustainable has coincided with another trend: college and university enrollment is falling (see Statewide University Enrollment over Time and Total enrollment in Oregon community colleges, 2006 to present). When enrollments drop, but campus stores follow a retail model, managers are left with three basic options:
- Increase prices
- Decrease costs
- Do both.
Because students comparison shop, sometimes from within the bookstore’s website, campus stores compete on a national level on price. Increasing prices will reduce sales and harm students. Campus stores have limited wiggle room on prices, both for economic and for ethical reasons.
Can managers decrease costs, then? Personnel costs are the single largest component of campus store costs, and include wages and benefits. Protections for workers, such as unions and PERS (Oregon’s public employee retirement system) make finding cost reductions very difficult for store managers.
Prudent managers, following a retail model, will set aside funds as a cushion against future revenue shortfalls. Oregon’s independent campus store managers assert that in some cases, campus store reserves have been transferred over to the General Fund to cover other institutional deficits. This has put several stores in the position of not being able to cover escalating costs while enrollments and revenues have declined.
Interestingly, many of our schools are starting to behave, on the macro level, much like stressed retailers. Decreased enrollments result in increased tuition and fees which results in decreased enrollments. This vicious cycle is playing out on many levels and can ultimately be traced back to underfunding public education in the state budget.
Objections to outsourcing
Campuses that previously participated in Oregon’s strong tradition of excellent independent campus stores are beginning to seriously consider outsourcing. When independent stores aren’t able to raise prices, lower costs, or fall back on reserves, turning over management to a third-party corporation may seem like the best option from the campus administration perspective. Third-party stores such as Barnes & Noble and Follett are perceived to have the deep pockets to offer a guaranteed funding stream that goes directly into the General Fund. The risk of decreased revenue because of textbook affordability efforts is seen to be offset by the giant companies’ ability to tap financial markets. Operating on an international scope, they also tout their advantage of being able to achieve economies of scale that would be impossible for an independent operator.
Outsourcing, however, comes at a cost. Here are five reasons that privatization may be bad for the campus and the community:
- Loss of jobs, or jobs move to a different employer that may not offer full pay, union membership, or equivalent benefits
- Mission may not be fully aligned with college mission, enabling a more profit-driven approach to students
- Impact on locally owned business if lease operators have national contracts for similar items; homogenization of offerings (students notice this, for example College goes corporate, an article in the Clackamas Community College student newspaper)
- Less transparency regarding use of student data, contract terms, finances, margins, corporate pay and bonus structure
- Ethical and academic freedom conflicts if corporate store has preferential partnerships with specific publishers and platforms, or makes revenue-sharing deals with the institution that favor specific vendors.
Further, privatization may not be as great a deal for the institution as it initially seems. Revenue promises in proposals to colleges may be unrealistic. Inventory losses may erase the first several years of payments because lease operators will only purchase inventory at cost for titles that are requested for the following term. Any other inventory will be purchased below cost or written off, resulting in a loss for the college. The institution may have ongoing obligations, for example if it is required to continue to employ store personnel who request a transfer to another college unit and are guaranteed positions in their prior employment contract.
Potential manager turnover affects the store and may have a wider impact on the campus as a whole. Since, as mentioned above, personnel costs are the largest component of the budget, third-party stores are very likely to lower costs by reducing wages and benefits, which can lead to high turnover among managers and staff. Managers may be able to be transferred to higher-paying stores within the corporate network, but the colleges they leave behind will have to recover from the turnover and try to attract new staff to run the store.
Potential student impact
Most of all, we need to be concerned about the potential impact on students. Third-party campus stores may prioritize revenue over values. Whether this approach is perceived or actual, it has a real impact on how students feel about their school. Are they customers or students? Is administration interested in wringing money out of them (often financial aid dollars, or loans that need to be repaid with interest), or in supporting them to achieve their academic goals?
As stated above, it is essential for students to find and purchase their course materials, but reduced, inexperienced, or culturally insensitive staff may provide a lower level of customer service. Work study positions, online price comparison tools, and policies to accept EBT or SNAP may be eliminated. Some third-party contracts specify that the school cannot share resources or information about affordable options with students in any online environment – for example via a textbook affordability library guide (the University of Central Florida was forced to take down one such guide because it violated the “exclusive campus bookseller provision” language in the bookstore contract).
The worst possible outcome is that prices for students may increase due to higher margins, having fewer low-cost options available, and a lower amount paid out for buyback – all of which add up to students not seeing the benefit from those deep pockets and economies of scale that seemed to make outsourcing a better choice in the first place. After all, the third-party bookstores are subject to the same market forces that are putting pressure on independent stores.
One independent store manager shared that when they previously worked as a corporate campus store manager, bonus pay depended on metrics such as inventory levels, profit, payroll, and return to publisher percentages. This means that several levers in the stores exist where the manager’s best interest is served by short-ordering textbooks and reducing staff, which affects customer service. A profit focus cannot be in students’ best interest.
New models needed
Just when use of OER seems to make us more free, are bookstores becoming more corporate? As one independent college store manager pointed out, there is seldom a chance to go back once the decision is made to outsource, with the resulting loss of infrastructure and expertise to manage our own course materials. Leasing stores may have the unintended effect of causing overall prices to go up because of higher margins, which is antithetical to the goals of OER proponents, and out of alignment with institutional missions that put students first. Keeping textbook prices artificially high is not a sustainable revenue source for the general fund. A really effective textbook affordability program will result in revenue loss that can’t be made up by selling more water bottles, coffee, and school swag.
As more administrations consider outsourcing the campus store, perhaps it’s time to rethink our models. 70-80% of sales in a community college bookstore are course materials related. In university stores, the proportion may look very different depending on the student population and sports culture. We may need a paradigm shift where the course materials functions of the bookstore are supported by the general fund (that is, covered by the tuition and fees that students already pay for essential services) and the self-support retail model applies only to the supply, gift, and clothing sales functions.
The story of outsourcing campus stores seems to be one showing that the current retail model is unsustainable. A new model may emerge, one where the value of the bookstore as a service to the college prevails as a necessary expense to the general fund. Got a great idea or an example of a sustainable model? Please use the comments to share!