Meeting Minutes 120417

Annual Shareholder Meeting

Seminary Co-op Bookstore

December 4, 2017

MINUTES

1. Call to Order

Deborah Epstein, Chair of the Seminary Co-op Bookstores Board of Directors, called the meeting to order at 5:35pm.  The shareholder meeting minutes from 2016 were unanimously approved via voice vote .

2. Director’s Report

Jeff Deutsch, Director of the Seminary Co-op Bookstores, welcomed all attendees both in person and via livestream and presented the Director’s report.  Jeff’s remarks are excerpted below.

I would like to talk about why the Co-op matters, and what it means to us today. I will also share results of our last fiscal year and discuss where we are, culturally speaking, and where we are going.

1. Introduction

Despite the Co-op’s continuing struggles, I have quite a bit of good news to share.  I want to state from the outset that our positive momentum is a direct result of your overwhelming response to calls to action recently issued by the Co-op.  At last year’s annual meeting, I shared advocacy tools with you and asked for your help in creating a brighter future for the Co-op, and you responded with great passion for our beloved institution.   So let me begin my report by thanking you for all you have done, and all you continue to do to make us successful; we could not have done it without you.  

While I have been a Co-op devotee since the early 90s, it is only since taking over as Director in June of 2014 that I have attempted to explicitly articulate what makes the Seminary Co-op such a special, some may say sacred, space. We were founded by seminary students hoping to pool their resources to buy obscure books cheaply. Through the 1970s, 80s, and 90s, the Co-op continued to grow, and former Director Jack Cella established the finest academic bookstore in the nation at a time when there were many fine academic bookstores.

The industry changed, however, after the turn of the century.  Sales declined, resulting in the many academic bookstores closing down.  The Co-op remained committed to the books that helped make its reputation, and did what we could just to survive. And survival was no small feat.

Today’s culture privileges convenience and price above all else, and ecommerce vendors have mastered this formula The Seminary students who pooled their resources to buy obscure books cheaply would have had no reason to found a Seminary Co-op Bookstore today. What, then, is the point now?

2. State of the industry

Consider the current bookstore landscape:

• Barnes and Noble’s annual sales were down 6.5% last fiscal year, and they just announced, a 7.9% decline for the second quarter of the current fiscal year.

• Books-a-Million, the second-largest bookstore chain in the US, closed their only Chicago location in February.

• Just this morning, we received news that the Co-op Bookstore in Baton Rouge, serving the Louisiana State University community, will be closing after 84 years.

• I‘d like to read a quote from the New Yorker magazine.  In the spring of 2015, Adam Gopnik wrote an elegy for La Hune, the legendary Parisian bookseller whose doors shuttered that month. He wrote,

At a minor level, once a bookstore is gone we lose the particular opportunities for adjacency it offers, determined by something other than an algorithm. It is rarely the book you came to seek, but the book next to that book, which changes your mind and heart. This act of mere looking and touching and even smelling pages, poking around without the benefit of links, is profound….A bookstore is a place you go to look as you choose, for as long as you want. The book-sniffer is the active form of his classier cousin the stroller, as the window-shopper is the dreamier form of the curator. Each makes choices, more or less freely, at a more or less happy whim, and lines her own library or museum, if only invisibly, in her head.

Gopnik concludes:

… Books are not just other luxury items to be shopped for. They are the levers of our consciousness. Every time a bookstore closes, an argument ends.

• And it gets worse.  Bookworld, established over 40 years ago and now the fourth largest bookstore chain in the country, announced in October that they are going out of business, and will close 45 stores in 7 Midwestern states by January 15th, 2018. Most of these communities will soon be left without a bookstore at all.

Thankfully our results are significantly better, but I share this news, and Gopnik’s reflection, as a cautionary tale. Your Seminary Co-op booksellers bring their passion and commitment to the good work of ensuring that our conversation continues – as Gopnik would say, the argument persists -- but nothing is a given.

3. Financial Results

See below.  

* Operating loss for 12-13 reflects inventory misstatement of $783k; neutralized, loss was $183k.

• Sales were up 7.9% or ~$225k compared to last fiscal year, and 14% or ~$369k compared to two years ago. The Seminary Co-op generated over $1.9 million in sales and 57th Street Books generated over $1.1 million. This is a 9.2% or $163k increase for the Co-op and a 5.7% or $61k increase for 57th Street Books. Notably, our Children’s department was up 19% to last year and 31% to two years ago.

• Our inventory value (books on the shelf) was $1,527,699, compared to $1,424,318 last year and $1,421,616 two years ago. This is a 7.2% increase compared to last year and a 7.5% increase to two years ago. The increase in inventory is commensurate with the increase in sales. Having more books on the shelf speaks to our commitment to grow, not cut, our way out of the deficit.

• Our operating loss decreased to ~$140k. While the operating loss has decreased by over 55% since July 2014, we still have a significant operating deficit. As a result of investing in our growth (including the launch of our podcast, Chicago Humanities Festival events programming, staff raises due to both the minimum wage increase and merit increases, and continuing to increase our inventory), we expect the operating loss to rise in the next year or two before hopefully dipping below $100k.

• We hosted or supported 442 events last year serving 26,415 patrons.  This compares to 348 events in 2015-16 serving 22,087 patrons, and 188 events in 2014-15 serving 8,851 patrons. These statistics reflect a 27% increase in the number of events and a 19.5% increase in attendance compared to last year, and a 235% increase in number of events and a 298% increase in attendance compared to two years ago.

These events generated ~$216k in book sales compared to ~$141k in FY15-16 and ~$61k in FY14-15. This reflects a 53% increase in sales compared to last year, and a 354% increase compared to two years ago. This number only accounts for the featured titles, not additional purchases during events.

While we try and host as much as possible in-store, we don’t have the space to accommodate large crowds. Just over half of the events were held in our stores, but these represent fewer than a quarter of all attendees. We have partnered with fabulous venues throughout the city to accommodate the crowds, and we include a Seminary Co-op bookmarks with every book that includes a “bounceback” coupon incenting customers to visit our stores.

4. Initiatives:  Literary, Cultural, and Community

The Board of Directors asked two things of me when I was hired: stabilize the finances, and do it without compromising what makes us unique. That we have seen such significant growth over the last few years is remarkable, but I am particularly proud of the fact that we achieved this growth without sacrificing our culture, and even enhancing that which makes us unique: the unflagging commitment to serious books and their readers. Some of the non-financial results from the past year include:

• We relaunched our website (www.semcoop.com) in September 2016, improving look and feel, allowing mobile responsiveness, creating a virtual front table, and offering a simple way to buy coursebook bundles for UChicago courses. This resulted in 29% increase in website revenue and a 30% increase in orders placed in FY 16-17.

• We launched our Open Stacks podcast in June 2017.  We have released 30 episodes since then and surpassed 16k downloads. Our listener base is international, with hundreds of downloads in Europe and Asia. The podcast is a way of extending community, maintaining loyalty, and perhaps most importantly, keeping connections for students and others as they leave the confines of Hyde Park. 

• We published our second annual Co-op Notables book list to expand our advocacy of the important work of scholarly publishers and writers, which is often absent from other year-end literary roundups. The response has been overwhelming, including social media comments:  “A list-based vicarious experience of what it's like to browse the fantastic @SeminaryCoOp, one of my favourite bookshops in the world”, “For discerning readers in Hyde Park and the rest of the world”, and, “This list is a reminder that there’s no store quite like the Seminary Co-op. Their bread and butter is most stores’ rare delicacy.”

• We revived our blog, dormant since 2013, in September 2016, and have published compelling original content including author bibliographies; “Reading Is Critical” lists from booksellers, customers, and speakers; and author and editor interviews.

• Our email list has continued to grow. We now have over 21k subscribers to our weekly email. We have also added a monthly children’s newsletter, and we now send out a monthly member credit notification. Our emails have an open rate that exceeds the industry average.  This tells us that – even as promotional emails pile up deeper in your inboxes, and spam filters fish out ever more legitimate messages – you are continuing to read our recommendations, learn about events, and engage with our community.

• We established a robust K-12 educator outreach program, including book fairs with half a dozen schools, as well as author visits, bi-annual educator appreciation nights, take-home catalogs filled with carefully selected books from our buyers, and a 10% discount for educators on books for classroom use.  

• We developed an Academic’s Guide to the Seminary Co-op in partnership with the Deans of Humanities and Social Sciences.  

• We developed an online method for supporters to give a gift to the Seminary Co-op.  While they are not tax-deductible, we have already received more than $5k from individual donors. If you have the means and inclination, I would encourage you to consider a gift today. You can do so on our website or at the register.

• We implemented a new membership program designed to increase engagement without requiring governance responsibilities. Since its launch in September 2016, we signed up over 6,500 new members.

5. Governance

The new membership program was part of our initiative to separate governance from perks, and to focus our shareholders on the work and responsibilities of governance. After engaging you here in this room at last year’s shareholder meeting, and then through a widely distributed letter and two town halls meetings, we have clarified which shareholders are interested in participating in governance.  

I have continuous conversations with shareholders who say they “just want to support the store” and don’t feel a need to engage beyond their time as a customer. I respect this perspective, and these shareholders are gratefully moved to Charter Member status to indicate they have stepped back from governance responsibility.  

We are also observing the provision in our bylaws that requires a minimum purchase of $10 annually to ensure shareholder status is maintained; shareholders who do not meet this requirement are also moved to Charter Member (non-governing) status, although they are welcome to return to shareholder (governing) status at any time.

As many of you know, a key governance question is the prospect of moving our bookstore from Washington D.C. to incorporation in Illinois, perhaps as a non-profit. We recently engaged counsel in both D.C. and Illinois and are awaiting memos from each that will outline our options. Once we have a full assessment of the legal and financial implications involved, we expect to engage our members to figure out a path for the future. My hope is that this will happen in 2018.

6. Conclusion:  Why the Seminary Co-op?

So what is the point today? Why do we need the Seminary Co-op? If a few of us were to get together in a world where the Seminary Co-op never came into existence, upon what principles would we establish our institution?

Seneca, in his first letter to Lucilius, explains how precious time is, imploring Lucilius to hold it in his grasp and make the most use of it. Seneca tells us we will not die at once, but are dying every day. He encourages us to use our time wisely; that our culture is in such a hurry shouldn’t deceive us into thinking that we have achieved some sort of enlightenment, for it’s not just about speed. Seneca states,

What fools these mortals be! They allow the cheapest and most useless things, which can be easily replaced, to be charged in the reckoning, after they have acquired them; but they never regard themselves in debt when they have received some of that precious commodity, -- time! And yet time is the one loan which even a grateful recipient cannot repay.

Our culture is constantly in a hurry, with no repose. There is little engagement with the quiet, slow narrative, the thoughtful, subtle argument or the poem that resists the intelligence, almost successfully. There is no reflection that will help us find meaning, beauty, or virtue. Our sense of urgency is lined with click-bait, half-scanned, cute, accessible, sensationalist cultural candy. We are losing our public spaces for reflection as libraries and bookstores are threatened. Might it be our shared commitment to creating a space for considering enduring questions through engaging timeless ideas that would bind us as a community and drive us to establish an institution like the Seminary Co-op?

I would argue that this is so. The work of the Co-op is predicated upon a specific sort of slowness – not in terms of service or response to our customers, but an appreciation, a determination, to provide and sustain spaces for intellectual curiosity, thoughtful debate, and the joy of discovery – all of which takes and rewards the investment of a certain sort of time, one envisioned by Seneca in his letter. 

Our stores value attention over sensation, surprise beyond seduction, and books that stretch our understanding of that which is necessary to live well. This is what I see as the core value of the Co-op: a commitment to this particular sense of time – one that endures beyond the moment, and one that is outside of our daily routines: toilsome, trivial, or otherwise. Emerson, in his marvelous essay, “Experience” (written after he suffered great personal tragedy) wonders:

If any of us knew what we were doing, or where we are going, then when we think we best know! We do not know today whether we are busy or idle. In times when we thought ourselves indolent, we have afterwards discovered that much was accomplished, and much was begun in us. All our days are so unprofitable while they pass, that 'tis wonderful where or when we ever got anything of this which we call wisdom, poetry, virtue. We never got it on any dated calendar day. Some heavenly days must have been intercalated somewhere…

From the vantage point of the register or information desk, we Seminary Co-op Booksellers have the privilege of observing our community nose around the Front Table. As we restock the shelves and retrieve web orders, we see how you lose yourselves in the stacks. We know this feeling well ourselves. This must be of that intercalated, heavenly time – the time when wisdom, poetry, and virtue open before us – and we are committed to providing our community with those hours of repose, discovery, wandering, inquiry, appreciation, and reverence.

As we all continue to steward this great institution, I ask that you go forward with this purpose, and to this end. I encourage you to continue to advocate on our behalf, and to recognize that nothing is given, that spaces like the Seminary Co-op only exist if our communities continue to create them, to sustain them, and to tend to their growth through direct, deliberate action. That action looks different whether you are a faculty member or a student, a long-time Hyde Park resident, a denizen of the diaspora, or a recent transplant. But no matter your job title, location, or preference for Ferrante, Piketty, Lorde, Burke, Augustine, Ishiguro, or Pessoa, your support of the Co-op is essential to our survival. And while buying books with us, and convincing your communities to do the same is critical, the advocacy page of our website includes many additional ideas for how you might support our stores beyond mere purchasing, and I will continue to be available to all of you if you would like to know how you can make a difference on our behalf.

I am grateful to you for these results, and look forward to passing a robust Seminary Co-op on to future generations of readers. Thank you.

3. Open Discussion/Q&A

Jeff opened the floor to questions.  Below are excerpts of the ensuing discussion:

1. What is the advantage of moving the co-op from D.C. to Illinois?

Simplicity.  There is no reason for us to be thinking about archaic D.C. laws.  It will give us a fresh start; we will no longer be stuck in 1961.

2. What operational issues have cropped up over the years due to our status as a D.C. co-op?  

We are required to spend money filing in D.C., and have difficulty finding an expert to tell us what the laws are and how they apply to bookstore rather than a real estate entity which is the more usual co-operative.

3. Have we considered becoming an Illinois non-profit?

We have explored status as a federal 501c3 but we don’t engage in enough activities to comply with the law.  Instead, we have begun exploring the possibility of becoming an Illinois not-for-profit.  We don’t know the details yet.

4. Can you provide more details about the Co-op’s deficit?

The Co-op’s retained losses are more than $1 million, which is the sum of annual losses to date.  We employ a line of credit with the Hyde Park Bank here in our community for cash flow purposes; this is our only current liability.  Our balance sheet shows accounts payable of $790k owed to publishers, but this is typical and reflects 30-, 60-, and 90-day terms of invoices.

5. How much member credit was issued this year, and how much was returned back to the Co-op?  

This hasn’t been calculated recently, but Jeff will look into it and provide this information at a later date.

6. How much of revenue growth is net of event revenue?  

$75k of our $225k revenue growth this year is attributed to event book sales, so $150k is due to in-store and online sales.  We see these as complementary.  Events aren’t just about revenue; they truly contribute to the conversation.  I’ve seen many members at events at both stores, as well as offsite events.  Creating conversation/community is a critical part of what we do.  A member commented, “I live on the North side, and if not for events I would never get down here.”

7. How do member credits work?

The mechanism for granting member credits was updated two years ago. It used to be that your entire credit was given in one lump sum, but in July 2015 we began granting credits on a month-to-month basis with unused credits rolling into the next month.  All credits expire at the end of June.  All credits granted prior to July 2015 have now expired.   Members are pleasantly surprised to have credits available when checking out at the store.

8. Has Libro.fm (the Co-op’s audiobook provider) made any significant contribution to our bottom line?  

We haven’t done a lot to publicize it yet. Many of you listen to audiobooks and we want to provide them, but we haven’t had a good way to sell them to you.  

9. My impression was there was some concern about needing all shareholders to participate in order to change our governance – where does this stand?

Per our bylaws, some items require a majority or supermajority vote of shareholders.  A year ago, we 61k shareholders.  Now we’re down to 8k shareholders, which is somewhat more realistic if we had to take a vote.

4. Nominations

Mark Hansen, the chair of the Co-op’s Nominations committee, presented the evening’s slate.  Mark explained the Co-op had had a 15-member board of directors, but were expanding to 18 directors over the course of three years.  Tonight, four directors are up re-election, and we are voting on two new directors.  For more information on candidates, click here.

1. Up for re-election are Deborah Epstein and Theaster Gates (both for their 3rd and final term) as well as Bill Sewell and Ken Warren (both for their 2nd term).

2. Up for election to their full first term are Erin Adams, a UChicago Biological Sciences faculty member, and Liz Kirby, the former principal of Kenwood Academy and now the chief of school strategy and planning for the Chicago Public Schools.

3. Mark called for a motion to accept the slate.  It was seconded and the slate was accepted unanimously via vote voice.

4. Lastly, Mark reiterated the enormous contributions of retiring three-term board member Jack Spicer.

5. Final Q&A

1. I’ve been told sometimes it’s hard for out-of-town members to buy books and use credit.

Members are welcome to use their credits online by leaving a note in the Comments field during the checkout process.

2. What do we offer for those who prefer e-books?  

We have a partnership with Kobo, which is the indie alternative to other e-readers.  Unfortunately, it’s not great but they’re working on improving it.  We want to serve readers of all stripes, so we believe this is important for our future.  We also have a partnership with Redshelf, which focuses on e-textbooks to help students , including rentals with expiration dates.  (This prompted a quote from Professor Marshall Sahlins:  “’Tis better to light a Kindle than to curse the darkness.”)  Offering audiobooks and e-books is low margin, but this is about being full service, not about the money.

3. Is it better to order textbooks from the Co-op, or does it lead to operating losses?  Please order from us.  We have more used books than we’ve ever had.  Even with new books, the difference between the price to purchase online vs. through the Co-op is dropping.  

4. Are we planning to make another appeal to membership to purchase more books?  How many more books should we ask people to buy?  

If 50k members, shareholders and their friends/families each bought two additional books @ $25 apiece, it would double our revenue.

6. Adjournment

Deborah Epstein asked for a motion to adjourn.  Seconded.