Staying Independent: CACS Mega Regional 2006

Staying Independent: What to do when you campus considers outsourcing

Presented by:

Tom Bauer,CCR, Director, SMCCCD BookstoresNancy Wichmann, Director, SDCCD Bookstores

CACS Mega Regional Meeting

November 5-8, 2006

OFFICIAL DISCLAIMER

This is NOT an anti-lease operator presentation. We realize that there are bookstores that operate successfully as outsourced auxiliaries. However, it is our contention that the best run college bookstore is the self operated, independent college bookstore. The intent of this presentation is to arm self-op store managers with as much information as possible to keep their store an independent auxiliary.

THE REALITY…

“As the Vice-Chancellor of Business Services or any person in a like position, you cannot be afraid to ask the question if outsourcing would be good for the campus or district from a financial and service perspective”.*

*James Keller, Vice Chancellor for Business Affairs, San Mateo County Community College District

The best defense is a strong offense

YOU AND YOUR STAFF ARE THE BEST DEFENSE TO OUTSOURCINGYOU AND YOUR STAFF ARE THE BEST DEFENSE TO OUTSOURCING

• As you prepare for another successful semester, focus on what you and your staff do for your campus community everyday.

• You are the expert.• You have the relationship and know your faculty, staff and students better

than anyone, especially an outside company. • You know the edition changes and which packages will work for your

campus.• You know which course related supplies are appropriate.• You know where students will be looking for alternative purchase options. • You hold the hold information.• You know the Why, Where and How for you campus. You know because

YOU are the expert!

What is my role in this offense?

• Educate, educate, educate...you are the expert on bookstores. If you are getting the info out there, there is no reason to look anywhere else for answers.

• Get involved at all levels-Board meetings, student meetings, department presentations. You have to be out there in the public eye at all times.

• Know your business, know your numbers, brag about your successes…constantly. If you don’t, how will anyone know how good you are?

What meetings should I and my staff be attending?

Board MeetingsPresident CabinetsFinance MeetingsDean’s CouncilsDepartment MeetingsFaculty Training SessionsFaculty SenatesAcademic SenatesStudent GovernmentsSporting Events

What More Can I Do?

• Know your business, your numbers, what you give back to the college and the students.

• Know how much money you have, where it is, how it is spent; share that knowledge with all relevant groups if possible.

• Have a business plan and a budget, publish it on your website, share it with as many people as possible.

• Talk about the benefits of your store to the community as often as you can.

What Services do you provide?

Make a list of the services you provide. Think about it, share it with others. How many of these services would be provided by a lease operated store given the fact that many of the services are low revenue generators if at all?

Here is a list of services provided by the San Mateo District Bookstores:

Services of the SMCCCD Bookstores

• Quality Customer Service• On-line Bookstore• Textbook Rental Program• Interdepartmental orders are delivered to the offices• We pay for Trustees graduation regalia each year• Assist with Graduation ceremony • Special Promotions and Events year-round• Underwriting the Loan-to-Own program (an interest free

computer purchasing program for SMCCCD employees)• Apple and Dell Computer Sales at Educational Prices


• Software at Educational Prices• Donations and Support to Campus Events, Scholarship

Funds, etc.• Bookstores pay for armored transport of college

business office deposits• Bookstores financially supports the Public Library

System and augments the CFO salary• Bookstore funds have been used for District needs ( one

example is; 1992 bookstore funds were used for planning and designing Skyline building #5 when it was going to be the student union with bookstore included)

• Transport/sell books for off-campus and weekend courses (evenings and weekends)


• Author Presentation Book Sales at Lecture/Reading Location

• Custom Publishing/Copyright Center• Books-In-Print Accessibility• Special Ordering• Photo Copies• Faxing (send and receive)• Transparencies (black and Color)• Laminating• Rubber Stamps (Customized)• Catalogue sales and mailings• UPS/FedEx Shipping


• Recycle toner cartridges (after handling expense donate remaining funds to donor campus)

• Check Cashing – with Floor Limits• Cash Back on Debit Card – with Floor Limits• Offer books for multiple campuses at Cañada (4 colleges

currently and more expected)• Notary Public• Donation of basic class required textbooks to the

campus library each semester• Loan funds to library for purchase of copy machines• Postage stamp sales with no margin

The Point

You do far more than you realize! Once you put it all on paper, share it with everyone. The self-op, independent store does many things for a campus that generate little revenue but provide exceptional service. You have to be your biggest cheerleader.

Ten Common Misconceptions about Outsourcing

Common Misconceptions about Outsourcing

Misconception #1:

Lease operators will offer the community better prices on textbooks, supplies, clothing and convenience items than the self-operated, independent campus bookstore.

Misconception #1-The Fact

Independent Bookstores operate as non-profit auxiliaries that are intended only to cover their costs. Lease operated stores are for-profit; they need to pay the university AND they need to make a profit. Numerous pricing surveys have shown that textbook prices at the vast majority of leased stores are significantly HIGHER than the self operated, independent store. The self-op store and the college make the final decision about margins. Leased stores observe margins on textbooks up to 30%.

Misconception #2:A lease operator will provide better customer service than the self operated, independent store because they are focused on customer service.



The self-op, independent store has college employees devoted to the college success. Service should be infinitely better in the self-op, independent bookstore. Leased stores have an incredibly high turnover rate in management and an even higher turnover rate in bookstore assistants. The majority of their labor force are part time, lower wage employees.


Misconception #3:

Self-op, independent bookstores cost the university more money than they bring in; they are not self supporting and are a financial drain on the university.


Self-op, independent bookstores are cost covering auxiliaries. They pay for all costs related to operation and support college activities. Most self-op bookstores actually contribute to the college's discretionary funds or cover expenditures that the college would otherwise have to cover. Whatever financial surplus that remains goes back into the campus community; a lease operator pays the rent and meets its contractual obligations. Their surplus goes back to the bottom line of the company.


Misconception #4:

A lease operated bookstore will provide more used books than the self-op, independent college bookstore.


Barnes & Noble, Follett and Nebraska Bookstores each own wholesalers that are the primary and in many cases the only source of used textbooks for the bookstore. The self-op, independent store sources from as many wholesale companies as they deem appropriate. Self-op, independent stores have more access to used books and oftentimes, higher used book sales and inventory.


Misconception #5:

Lease operated bookstores have expertise in textbook management. They do a better job at procuring and managing a textbook department and invest in educating their staff in textbook management.


Self-op, independents stores have numerous educational resources for the staff; NACS, CACS, Regional Associations, C2O, ICBA, Context. Self-op, independent stores invest a great deal in educating their staff. The stability of the independent store staff insures the knowledge of the campus, the faculty, the booklist…you have the history; they don’t.


Misconception #6:

A lease operator will provide better buyback prices for students.


As with the procurement of used books, lease operated stores buy books for their own wholesale company. Wholesale prices at a leased store are often LOWER than at the self-op store for the same wholesaler. One has to wonder… why? The self-op, independent store can use multiple guides for buyback to offer students the best prices for non adopted textbooks.

Misconception #7:

The variety and quality of general merchandise will be improved with a leased store.


Misconception #7: The Fact

Self-op stores buy from vendors that offer the best price and quality. They often buy from local vendors. Leased stores buy from vendors that are corporately approved based on a variety of factors; savings to students not being the primary factor in that choice. Pricing comparisons are noted in both RFP’s. The comparisons consistently show the self-op store has lower prices than the leased store.


Misconception #8:

Lease operated stores have unique, independent websites that are interactive and provide the students with state of the art web ordering capabilities.


Leased stores all have the same basic template for their websites, they are not unique or innovative. Many provide only textbook reservation capabilities and have very limited merchandise offerings. Self-op, independent stores have a number of choices in providing e-commerce and have much more interactive websites that are managed by the store and not by a corporate office.


Myth #9:

If a store is leased and the community is unhappy after a period of time, they can always return to self-op status.


Once a university sells all the inventory to the lease operator, sheds the staff salaries and benefits, reapportions the financial reserves and assets the bookstore owns and accepts the cash of a lease operator at signing, it is almost impossible to go back to self-op status. The amount of money required is oftentimes more than a university can spend on any auxiliary. The only remedy is to lease to one of the other two operators and hope for the best.


Misconception #10:

A lease operator will provide the campus with a brand new bookstore at no cost to the college.

Misconception #10-The Truth

Nothing is free! Renovations are routinely depreciated over the term of the contract as a yearly expense. The store staff is required to manage their sales and expenses so that it optimizes profit for the company. In order to do so, the store will have to cut salaries and essential expenses in times of declining enrollment or increased competition resulting in reduced service to the campus community.

Ten Reasons for Keeping your Store Self-Operated and Independent

Top Ten Reasons to Stay Self-Op

1. Your college bookstore exists as more than just a profit-making arm of your institution. It is a unique part of the institution. Its’ mission is to serve every student, faculty and staff member. The campus store is an academic, cultural and public relations resource as well as a financial one.

2. Given that a lease operation's primary interest in colleges and universities is running a successful, for- profit business, it follows that service may be secondary. Your bookstore can provide both profits and service and you can control the balance of the two.


3. Your store provides many services to your institution, for example: caps and gowns, alumni gifts, copy services, check cashing, book buy back, and many others. Will a lease operation provide these same services? Will they provide them with the same genuine concern for the students, faculty and staff of your institution?

4. Your bookstore supports various student organizations, publications, campus and athletic events. Will a lease operator do the same? Do they care about your students as much as your own employees would?

5. The chain store mentality of the lease operators is simply not compatible with a serious academic environment. Chain stores systematically eliminate individuality and reduce operations to the lowest common denominator consistent with their planned profits. The interest of the contract management company will come before that of your institution... students, faculty and staff.


6. To be an exceptional campus you need an exceptional bookstore. Chain stores do not generally produce exceptional bookstores; they produce uniform ones in many cases! To have a bookstore that maintains the diversity and individuality of your campus, you must retain control!

7. Control is key to a successful bookstore. By keeping your bookstore as an institutional/self-op concern, you control pricing, hours, service and institutional image. You control who is hired and how they are trained and managed. Prices and profits can be managed at your discretion.

8. When a lease operation takes over, product selection can decrease. By maintaining control you can provide a greater "mix" of products which meets your students' needs and you can respond quickly to changing trends!


9. Shopping comparisons consistently show leased stores charging more than institutional stores for identical products. Are your prepared to address the issue of increased prices with your students and their parents?

10. Your Store identity and staff loyalty is crucial to your success. Are you prepared to have a revolving door of managers and store staff with no real concern for the well-being of your institution?

Remember...loyalty cannot be contracted!

The Ball is in Your Court

• You need to dispel the myths on your campus.

• You are not alone; there are numerous resources to help an independent store where the question of outsourcing has come up. Store can contact NACS, CACS, C20, ICBA and….

Your fellow stores that have survived

OTHER STORES THAT HAVE SURVIVED• San Mateo Community College District

Bookstores-students and faculty turned out in record numbers to defend the stores.

• Contra Costa Community College District Bookstores

• Brown University Bookstore-great website!www.savethebookstore.org

Let’s Hear from the Resident Experts

Q&A with those who have been through their own RFP.

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