UA seeks outside bids from firms to operate campus bookstore

University of Arkansas students are shown on the lawn in front of Old Main on the campus in Fayetteville in this file photo.

FAYETTEVILLE -- The University of Arkansas has asked for outside bids to operate its main campus bookstore, requiring interested companies to commit to keeping full-time employees for six months.

But the long-term outlook for those workers would remain uncertain as the campus bookstore industry undergoes change related to the increased use of digital course materials, experts said.

"For the whole industry, the whole challenge is then, 'How do you bring traffic into the bookstore if it's digital content and it's being purchased online?" said Jonathan Bibo, chief executive officer for the Independent College Bookstore Association, which includes the UA bookstore as a member.

The university listed 16 full-time bookstore positions in documents released with its request for proposals, an employee total that includes one worker identified as a supervisor for the university-operated Razorback Shop at a mall location in Rogers.

The request for bids states UA is open to management bids for both its main campus bookstore and the Rogers location, together or separately. The document states UA may "no-award" the request if it "deems the Proposals are not in the best interests of the University." Bids were due Sept. 25, the document states. It also lists Jan. 1 as an "anticipated start date" for management services.

When stores are operated by outside entities, worker "benefits and salaries are not the same," said James Howard, academic materials manager for the OSU Beaver Store, a student-governed, nonprofit organization serving Oregon State University.

Howard said he's worked nearly three decades in the campus bookstore retail industry. He said colleagues at various schools have described how things can change when stores go from independent to being operated by corporations.

"They did not get retained. They made too much money beforehand as state employees," Howard said, describing the experience of some workers who had to reapply for positions after a management change.

Other times, workers kept their jobs but lost benefits, Howard said.

"State benefits, no matter where you are, are pretty good," Howard said.

Benefits for workers at UA include tuition waivers for employees and their families, university contributions to health insurance and retirement programs that provide university contributions of 5% to 10% of an employee's salary, according to UA's website.

Salaries listed for 15 full-time main campus bookstore workers range from $22,106 for a shipping and receiving clerk to $54,989 for a textbooks manager, according to the request for proposals, with the average salary at $34,264.

In a statement, Mark Rushing, a UA spokesman, referred to the bid request document, which states university workers would "become full-time employees of the Contractor." He said the university's goal "is to ensure that the selected vendor provides compensation and benefits similar to what the university is providing to those employees at the time of the change."

Financial data provided by UA to the Democrat-Gazette showed the bookstore's income exceeded expenses last year, fiscal 2019, with $13.62 million in income and $13.16 million in operating expenses.

But the financial information also showed annual debt service of about $1.03 million for the year, and Rushing said in a statement that the university has "an aggressive debt service schedule to pay for the facility in 20 years, 10 years shorter than the normal 30-year timeframe." The approximately 21,760-square-foot main store is housed in the Garland Center, which opened in 2010.

"And we fully expect that the bookstore's income will be greater than the total operating expenses, including the debt service payments for the construction of the facility, in the near future," Rushing said.

Published financial schedules and data provided by UA for bookstore operations show that three out of the last four fiscal years, revenue exceeded expenditures. But all four years ran at a loss if yearly debt service payments of approximately $1 million are factored in, and store operations over the same time period have seen revenue steadily decline from about $16.16 million in 2015-16.

A report from Duvall Consulting Group LLC stated the "University of Arkansas bookstore has been suffering financial losses for several years and changes need to be made to manage financial risk." The report offered "two potential operational options": outsourcing, or to engage a consultant "to help operate and improve the store for the critical summer/early fall time."

The university released a mostly redacted version of the report under the state's public disclosure law after a Democrat-Gazette request for bookstore consulting reports dated on or after Jan. 1, 2018.

Contract records released by UA state the university had paid $161,219.85 to Duvall Consulting as of July 30, 2018 for bookstore consulting services, with a contract to extend into 2019. However, UA, in a letter on Nov. 30, 2018, informed Duvall Consulting that it was terminating the contract.

The bid request states that the campus bookstore provides "course material for all classes offered by UA." Bidders are asked to provide detailed information about textbook pricing and "plans to deal effectively with changing types of course materials."

The request for proposals also indicates a desire to boost sales of non-textbook merchandise.

Limited financial data included in the request for bids shows textbook sales of $5.25 million through some point in June of fiscal 2019, which ended June 30.

But millions are also generated by selling other items.

Even stripping away computer sales at the bookstore -- as bid request documents state that a computer store will be managed by the university -- the campus bookstore sold $2.64 million in "Razorback Shop" merchandise, as well as $1.13 million in supplies over the same fiscal 2019 time period.

The university has asked bidders to submit, in addition to other financial details, a "detailed description of Respondent's plan to increase sales of emblematic and logo merchandise, clothing and gifts," as well as a marketing plan for selling logo merchandise via the bookstore's website.

The university states in the document it is seeking store management "committed to providing a vibrant destination place for its constituents to gather and create connections, as well as, a place to purchase textbooks, sports apparel, trade books, souvenirs, merchandise and much more."

Bibo, with the Independent College Bookstore Association, said that nationally, about 1,650 campus bookstores are self-operating. Companies that operate campus bookstores include Follett Higher Education Group, which is described on its website as managing more than 1,200 stores in North America, and Barnes & Noble College, which states on its website it operates 773 campus stores nationwide.

In the past, UA has leased out bookstore operations. The university's nine-year deal with Follett ended in 2002.

Among other large public universities in the region that responded to Democrat-Gazette queries, a University of Missouri spokesman stated the school operates its campus bookstore. Louisiana State University and Mississippi State University have Barnes & Noble campus bookstores, spokesmen for the schools said.

"Most college stores, the goal is to try to break even," said Rich Hershman, vice president of government relations for the National Association of College Stores, adding that "it really goes back to how the university is defining the mission of the store."

NW News on 10/22/2019