University/College Bookstores:
PAST, PRESENT, and most importantly FUTURE
By
Ron Duvall
Chapter 1
University and College Bookstore Operations: An Introduction
Welcome to my blog series focusing on university and college bookstore operations. The purpose of this series is to offer a comprehensive understanding of the history, evolution, and future direction of bookstore operations. By exploring these areas, institutional administrators—those responsible for overseeing bookstore managers or managing bookstore contracts—will gain valuable insights into the strengths and weaknesses of both self-operated and leased bookstore models.
I suggest that you share this with your store manager if the store is self-operated. I find it is helpful for the store managers to know what his/her supervisor is reviewing relative to the store operation. I am sure not everyone will agree with all of my comments relative to store operations. But rest assured that my 45+ years across all areas of store operations has provided me with an insight that very few individuals have.
Establishing My Credentials
Before diving into the subject matter, it is important to share my background and experience in bookstore operations. With more than 45 years in the industry, I have been involved in every aspect of bookstore management. Here is a summary of my career:
- My career began at SUNY Canton, where I started as a work-study employee in the campus store. Upon graduation, I requested to become the store manager and, thanks to the executive director of auxiliary services, was provided with a tailored program that allowed me to take on the role in less than a year. This mentorship was instrumental in laying the foundation for my career, and together, we introduced innovative practices that greatly benefited the store.
- After serving as manager for seven years, I returned to school to complete my bachelor's degree.
- Subsequently, I was recruited by a major store lease operator and became the director of stores at Johns Hopkins University in Baltimore.
- Following my time at Johns Hopkins, I accepted the position of Vice President of Operations for a regional leasing vendor. In this role, I oversaw management hiring, training, and financial performance for the stores. Within two years, we expanded to include 17 new stores. The parent company, a card and gift shop chain with locations along the east coast and headquarters in the Empire State Building, offered invaluable retail expertise. Working alongside them, I realized there was much more to learn about retail operations, and this experience significantly enhanced my retail knowledge.
- After this period, I began my consulting work. One of my first clients, Georgetown University, offered me a rewarding position as director of stores. Over eight years, I oversaw the construction of two new stores, including a major anchor store in the main campus student union, a brand new law center store, and the renovation of the medical store. During this time, I also oversaw the computerization of all stores, making them among the first in the nation to adopt this technology. As a result of these efforts, Georgetown’s stores achieved the highest profit percentage in the country.
Following my work at Georgetown, I launched my consulting company, Duvall Group (www.duvallgroup.com ), which has been active for 30 years. In this capacity:
- I have assisted a wide range of institutions, from the smallest campuses to those with 40,000 students and $35 million in annual sales, helping self-operated stores improve sales, profits, and services.
- I have guided institutions through the transition from self-operation to leasing by developing RFPs and supporting their implementation.
- I have managed both short-term (3-4 months) and long-term (12-18 months) consulting projects, turning the smallest stores to largest stores from unprofitable to profitable operations.
- I have delivered two-to-three-day training programs across the country, including in Guam.
- In response to the significant decline in textbook and spirit shop sales, I developed a Remote Management program. This multiyear consulting initiative leverages the current textbook delivery system to increase market share from 25% to over 90%. The program also supports a hybrid model, enabling spirit shops to return to self-operation with a focus on enhancing services, expanding quality product offerings, and controlling prices.
From this brief career description, I hope you can see that I am one of the most knowledgeable individuals in this industry.
College bookstores, where they came from, where they are and where they are going
Past
The Past bookstore operation was reasonably enjoyable for the store manager and staff other than the occasional issue about high prices. Store management didn’t have to be well versed in retail management. Textbooks were required and they only had to be on the shelf. Textbooks were, by far, the highest revenue volume and profit for the store. This is an important factor in the current downfall of the campus bookstore.
Unfortunately, bookstore managers were not and to a great degree, are not retailers. The reason I know that is because I started my career in bookstore management as part of my work study financial aid in my college’s bookstore.
I decided I liked working in bookstores and, upon receiving my associates degree, became manager of that bookstore. I never received any retail store training. I attended the bookstore meetings and training sessions, learning from other store managers. It didn’t occur to me that they had essentially the same background and training level as I had. They didn’t have any guidance other than the “Pass it Down” approach. I remember when I was recruited by a major lease operator, I was finishing up my bachelor’s degree after managing my first store for about 7 years. I was short one course to graduate due to my advisor forgetting to tell me I needed it. I informed the regional manager that I didn’t have my bachelor's degree at that point. He said, “Can you read and write” and I responded affirmatively. He said you are in. That is how I became director of the Johns Hopkins University bookstores.
I thought I was the best thing in store management, not realizing I knew very little about retail management, which is essentially the shop spirit.
Now, I do not want to be disparaging toward college bookstore managers. They are great people. It is just that they deserve better training, and just like me, don’t realize it.
Present- From about 2000 to present the bookstore industry changed dramatically. The advent of the internet flipped the industry on its head. Rental books came on the scene because students could order them online from Chegg quite easily. Some of you may remember the orange boxes at the beginning of the semester. Or at least heard the complaints from your mail room staff.
Thus, starting competition for all size bookstores began. Following rental books, came online sales of new and used books, OER, and digital. Suddenly, store managers had to deal with significant textbook over ordering, publishers started limiting the amount of returns they would take. Even book buyback (buying used books from the students) had online competition. Spirit merchandise could be purchased online for several institutions. Sales started to decline and continues to this day.
That was the beginning of the upheaval in the bookstore industry. Competition came to every campus whether they were 500 students or 50,000.
As technology advanced, digital books came on board. Digital intellectual property is becoming more prominent.
Interestingly, the cost of digital pricing isn’t that much less than the hard copy in most cases. This doesn’t make sense since delivery is made via the internet, all physical costs are eliminated (printing, packing, shipping, returns, etc.) Again, I contribute this to the “monopoly effect” mentioned earlier.
I started my consulting business about 30 years ago, after receiving intense retail training from the senior staff of a card and gift shop chain. They owned the bookstore leasing company that I went to work for. One of the questions I would always ask the client store manager was “from a financial perspective, what is the most important product department in your store-textbooks or nonbooks.” To a person, the answer was always nonbooks because the margins were about double those of textbooks. The absolutely wrong answer. Yes, the margins of imprinted apparel, gifts, and supplies are about double those of textbooks, but the textbook sales volume during this period was at least 3 times that of nonbooks and they could return the excess textbooks. Not tee shirts or #2 pencils. This incorrect answer was the result of store managers not understanding how the retail math works.
The problem of not knowing the answer to that question became obvious when we entered the Present period and textbook sales started to decline due to all the online competition. The stores did not and largely do not understand the financial problem created by textbook volume dropping significantly. With the traditional bookstore model (textbooks being sold in the store) store management have not properly addressed the issue. They have not adjusted their costs (payroll, operating expenses, etc.). Now bookstore profitability has been significantly reduced and, in many instances, replaced with losses.
To see what store managers use as justification to their senior administrators, you must go back to the fact that almost every manager in the industry has the same background- very little retail training in marketing, merchandising and, probably most important, financial implications of industry issues. I am sure you are aware there are bookstore industry benchmarks available to bookstore managers. The numbers are provided by other bookstore managers. So, it is fairly easy and convenient to point out that their store results are very similar to their peer stores. And their superiors, thinking that benchmarks of peer institutions are reliable as the acceptable norm, accept the results as “the best they can do”. When, in fact, they can do much better.
This approach, unfortunately, has plagued the self-op stores since outsourcing came onto the scene in the late 60s, even in the golden age of the past. Self-op managers relied on benchmark reporting to justify why their store was in good shape rather than looking to improve their operation to the top 10% of the industry . They didn’t seem to recognize that their administrators were looking at the store’s financial return of 5% or less and have 3 years’ worth of inventory in the back room, as compared to contractors presenting them with a proposal that showed a 10%-12% commission and would buy the store’s current inventory . The store management would say they could not do any better, and their boss says then we must outsource.
What the store management didn’t realize was they didn’t have to equal contract proposals they just had to get reasonably close and get their inventory in line. However, since they don’t really understand retail, they did not know that they did have the power to get their inventory in line and get closer to an outsourced proposal.
I have talked with hundreds of administrators such as yourself. I know from these conversations that you don’t really want to outsource but you have a fiduciary responsibility to your institution. Outsourcing is not a fun exercise. However, results from current self-operations must improve or you must contract. You can and you must demand more from your self-op stores and your contracted stores. They can do it. They just aren’t aware of what is needed.
Yes, your contracted stores also. Textbook sales are falling just as self op stores. What previously was 90%+ of the textbook market share is now down to about 25% market share. This has a direct impact on commissions paid to the institutions.
One of the interesting aspects of textbook sales reduction is that non textbook sales are dropping as well. Although spirit merchandise is not falling as fast it is still falling. My sense is that with leased stores, their corporation is reducing the store’s personnel expenses. There are fewer staff to handle spirt merchandise. When more textbooks are purchased online rather than in the store, foot traffic at the store will be reduced during the first couple of weeks of each term. However, that will primarily impact supplies. After that period, spirt merchandise sales should remain the same. But they’re not.
Bookstore operations look bleak. Utilizing the traditional “textbooks sold within the store”, the future is not good. Sales will continue to decline for both self-op and contracted stores.
So, what is a CFO or auxiliary services director to do? A couple of options, which I don’t like, are to continue as is and let a valuable financial and service operation wilt or treat the store as a service and not a viable financial revenue provider of great services which it can be.
I was talking with a college administrator a couple weeks ago. He said they solved their bookstore problem- they converted it to a service to be financially supported by the institution. THAT’S A MISTAKE. When you convert a bookstore to a service entity, you take the focus off providing the best operation that it can be. Its expenses are being covered externally and services slide. This conversion basically represents throwing in the towel.
Sounds bad doesn’t it.
There is a path that puts bookstores, lease or self-op, back on the road to success for higher education institutions.
My next installment of this series will discuss Present/Future: The future is much brighter with emerging solutions and best practices providing much more positive results than in the recent past.
