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Campus Retail

Keeping college bookstore prices down and revenues up

Higher ed administrators must set realistic expectations for wide-range of services stores provide
University Business, February 2017
Robert A. Walton is CEO of the National Association of College Stores.
Robert A. Walton is CEO of the National Association of College Stores.

A campus bookstore director relayed a conversation he’d had with the administrator to whom he reports.

“I asked my boss whether he expected the store to generate as much profit as possible, or whether he wanted the store to ensure prices on course materials and other necessities were as affordable as possible for students.”

The answer was “yes.”

That response sums up the financial conundrum for campus bookstores—and often other auxiliary services—at most higher education institutions. Stores are asked to increase revenues to support operations, scholarships and other campuswide needs as well as drive down prices and ratchet up services to help students.

Can it be done? Yes. Can it be done without outsourcing the store operation? Absolutely. But first, administrators must have a thorough understanding of the full value that their store provides, and the competitive environment in which it operates.

This process will help you evaluate the merits of new technologies and store models that can help improve operational efficiencies and lower costs, without sacrificing service and autonomy.

The new normal

Schools used to be satisfied when their bookstores produced a net return in single-digit percentages or, in some cases, simply broke even. The store provided indispensable service and support to students and faculty. Profits came second.

The campus scene is different now. States have cut deeply into higher education funding and some are capping tuition. Enrollment is shrinking at some institutions as others face major expenditures for facility repairs.

The scene is also different for campus stores. For-profit competitors have sprung up on the web to sell course materials and products to students. Some online companies offer certain textbooks at retail prices below the wholesale price paid by the store.

That’s great for students—and many stores provide price comparison tools to help students decide where to buy—but it means reduced revenue for the store.

Most stores also stock lower-cost options such as rentals, digital versions, used copies and custom books and course packs with just the pages a student needs. Others are exploring inclusive-access programs—which usually involve pairing materials with tuition—and working with faculty on open educational resources.

These solutions, while great for students, typically return less to the store’s bottom line than traditional course material sales.

The many services a store provides its campus add great value, but add little to its bottom line. When a store employee spends time helping a student with an access code, the interaction doesn’t result in a purchase.

When the school needs a place to sell event tickets, renew parking passes or replace ID cards, often the store steps in to take care of it, but derives no direct revenue.

When a faculty member on sabbatical wants to re-adopt a textbook from two years ago but doesn’t have the information handy, the store will take time to research it and confer with the professor.

Toward enlightenment

Campus bookstores can balance financial return with affordability and great service. But administrators need to understand the dynamic tension under which stores operate, and must set realistic, mutually agreed-upon goals. These steps can help ensure success:

  • Consider the institution’s overarching goals for revenue, student affordability and other initiatives, and the impact that each could have on the campus store.
  • Review all of the things your store currently does, including those that don’t directly produce revenue, such as services, assistance and collaboration with other campus entities.
  • Explore new technologies and models, such as POS systems that allow dynamic textbook pricing and inventory management solutions that can improve operations and lower costs.

If you work with your store to set realistic goals, everyone wins—most of all your students.

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