“The campus bookstore crunch: Rising prices + online competition = falling sales” Special to the Quill & Quire, Nov. 1, 2005

 

A decade ago, the university and college textbook market was a straightforward one. Each semester, students faithfully trudged over to their campus bookstore, list of required books in hand, and handed over hundreds of dollars. But as textbook prices continue to rise dramatically, and as online booksellers become more aggressive in their strategy, the conventional campus bookstore is increasingly embattled.

“In the last analysis, we are selling fewer textbooks than a few years ago. That’s the bottom line,” says Pat Joas, manager of the University of New Brunswick Bookstore in Saint John. Indeed, Wendy Spiegel, Pearson Education’s senior vice-president of communications at Pearson in the U.S., also believes that the Canadian textbook retail market was flat in 2004 and has been flat so far in 2005. What’s a campus bookstore to do?

Some campus booksellers blame their sales declines on publishers’ pricing practices. “Price is the ultimate factor, and a lot of these packages are coming out at enormously high prices, over $100 in most cases,” says Joas. “That’s probably double what it was just a few years ago.” Chris Tabor, general manager of the Campus Bookstore at Queen’s University in Kingston, Ontario, observes that while the store’s overall revenue is up, textbook unit sales are declining at an annual rate of about 1% over the last few years. “It’s a reaction to increases in prices, I think,” he says.

Some stores do discount – the University of Toronto Bookstore offers about 10% to 15% off of shrinkwrapped bundles, and deeper discounts on a select list of titles at the beginning of each year. But overall, discounting is hardly a popular tactic among campus stores. And among booksellers and publishers alike, there is a widespread though hard-to-quantify
perception that more students are sharing, illegally photocopying, and foregoing textbook purchases completely.

According to a study released in August by the U.S. Government Accountability Office, textbook prices in that country have nearly tripled since 1986, an increase of 186%, in contrast to overall prices of goods, which rose by 72%. The report also noted, “According to publishers, textbook prices in Canada and Australia tend to be similar to those in the United States because the instructional styles are similar in that instructors select specific textbooks for their classes.” According to the GAO, prices are on the rise because of production costs, and new features such as websites and instructional supplements, often requested by faculty to keep materials current.

Patrick Ferrier, the president of McGraw-Hill Ryerson’s higher education division, says mounting prices are inevitable in that they reflect publishers’ burgeoning costs. “But I wouldn’t want to give you an impression that our industry is not aware of the consumers’ concern about price,” he adds. And in response to bookseller accusations that supplemental materials are used to drive up prices, Ferrier points out that McGraw-Hill Ryerson policy stipulates “no supplements will be packaged with books unless the professors specifically require that it be done.”

While many campus stores are facing dropping sales, for online booksellers the textbook market is a growing one. This past summer, Amazon.ca expanded its textbook offerings and launched a “new textbook store,” where nearly 10,000 textbook titles are available for up to 10% off the list price, in addition to Amazon.ca’s standard free shipping on qualifying orders of $39. (Citing a policy against commenting on sales data, Amazon declined to respond to questions from Q&Q.)

And in January 2005 alone, the Victoria-based used-bookseller network Abebooks.com sold $5-million U.S. worth of new and used textbooks – an increase of 400% from the previous year, says public relations manager Richard Davies. Realizing the untapped market, Abebooks.com began signing up more booksellers with extensive textbook offerings and marketing to students on American campuses. Says the Campus Bookstore’s Tabor: “When students come in and see a textbook for over $100, which is not uncommon, the natural reaction is to think they must be cheaper somewhere else, and they look to online alternatives.” Sometimes, Tabor says, students find the same prices elsewhere, and return. Other times, they abandon the sale altogether.

Indeed, three Toronto-area university students, frustrated by textbook costs, have launched a website where students can swap and sell books. Initially making its debut in 2003, BooksForSchool.ca was relaunched this August. So far, students from 150 schools across Canada have registered. “Students are getting fed up. They are going to either stop buying the textbooks or demand textbooks get cheaper,” says Michael Levine, an information technology student at Ryerson University and one of the site’s founders. “Ultimately, we really don’t have a choice, either we have to buy the text or risk getting a lower grade – and it’s not fair.”

Not all campus stores, it should be noted, are seeing a sales slide. “We barely saw a blip, but sales are still up moderately,” says Nancy Masocco, the University of Toronto Bookstore’s course materials manager and University of Toronto Scarborough Campus Bookstore manager – though she adds that higher enrollments could account for the rise. Paul Wilde, course materials manager at the University of Alberta Bookstore, says sales show a “phenomenal increase” over last year in both revenue and units. Wilde chalks up the store’s success to ensuring that 90% of the books were on store shelves two weeks before classes started. “And that makes a huge difference. If you don’t have them, that is when they start going online or going to the competition.”

Campus booksellers are also keeping an eye on developments in digital delivery, which higher-education publishers have been slightly quicker to explore than trade ones. In the U.S., four publishers and 10 campus bookstores announced recently that they will be producing digital textbooks – to be sold at about 33% off of list prices – with pages that “turn”; text that can be highlighted and searched; and features such as weblinks, audio, and video. Students must pay to authorize their Universal Digital Textbook Card, about the size of a credit card, before they can log on to a website to download the text.

In Canada, McGraw-Hill Ryerson has been offering e-books since 2000. Today, they offer 1,700 e-books – as custom books, PDFs, and e-books offering online views. Most recently, they teamed up with Zinio Systems to offer exact online replicas of their more popular textbooks. And last year, Pearson Education introduced SafariX Textbooks Online, which offers web versions, at half the cost, of 600 of their major textbooks. This September marks the first full academic year they have been available, but Pearson’s Spiegel says they won’t have a firm sense of student usage until next spring. And at McGraw-Hill Ryerson, says Ferrier, digital sales still represent only a small percentage of total revenue.

Should e-textbooks begin growing significantly, the challenge for campus booksellers will be to ensure that such sales still flow through them. Currently, more and more major publishers are selling their titles directly to consumers on their websites. “We don’t see how it would be possible at this stage to be eliminated from the equation, but we are concerned,” Masocco says. Wilde, too, is hopeful the bookstore will remain the main hub. “If it’s just a link from our site, we still want to be the one-stop shop for course material,” he says.

For now, though, digital textbooks might still be a hard sell. Wilde recalls a bio-chemistry textbook that was being sold with its digital counterpart as a shrink-wrapped package for $125. Though the digital version was also available on its own for only $62, almost nobody bought it.