Meeting Minutes 2023

 

Annual Community Meeting

Seminary Co-op Bookstore

December 3, 2023

MINUTES

I Introductions - Noor Shawaf, Senior Director 

II Remarks -  Katie Parsons, Board President

  • Thanks to outgoing board members Kenneth W. Warren, Erin Adams, and Martha T. Roth.
  • Welcome to incoming board members Lori Berko, Eric Slauter, and Andrew Simnick.

III Report -  Jeff Deutsch, Executive Director 

Welcome  

Welcome to the annual meeting of the Seminary Co-op Bookstores, the first not-for-profit bookstores whose mission is bookselling – that is, our mission is the bookstores themselves. 

Thank you so much for being here and not somewhere else. Ten years ago – almost to the day –  when I first applied for this job, I thought it wise to read the then-board president Harry Davis’s just-published book, Why Are You Here and Not Somewhere Else. 

I asked that question often as I contemplated leaving what I thought was the job I’d retire from at Stanford University and what I thought was my forever home in Oakland, California. And I’ve asked and answered that question often over the last ten years, as we worked closely with you, our community, to make an existential case for the sort of bookstores the Seminary Co-op and 57th Street Books embody, and the sort of institution we represent. 

But why are you here and not somewhere else? I imagine your answers are as varied as the 100k books on our shelves. 

Our Community

We recently asked many of you this. We sent a survey to 3,700 of our most engaged community members; more than 1,000 of you responded!

Respondents range in age from 18 to 90 -years old, born between the years 1933 and 2005! 70 of the 72 years in that range are represented. The two years that aren’t represented? 1935 and 1989, strangely.

Respondents came from 350+ zip codes, from Chicago to NYC to Hawaii. 

The fact is, the Seminary Co-op community, like the stacks themselves, is quite varied. And your interests in the stores are quite varied.

Here is what you told us: 

  • Quite a few of you called it a cultural treasure.
  • Many of you spoke of community, calling us true community builders, and enthused about our children’s books and programming, saying it was your favorite place in Hyde Park and the favorite place in your kids’ lives!
  • One of you grew up in a rural town without any bookstore, and when you came to college, we were the first bookstore you could visit. You said that stopping by still brings you joy.
  • Another of you grew up here and then, inspired by us, opened a bookstore in Eastern Europe after the fall of communism. You said that we have been a formative institution in your life and are enormously grateful to the folks who keep it running.
  • One of you said that you didn’t mean to be critical – but other bookstores have too many things other than books, and that you walk into Seminary Coop and feel that you are at a bookstore!”
  • Many of you called out the knowledgeable, courteous, helpful, friendly, warm, well-prepared, and professional staff.
  • You called us an incalculable component of the neighborhood’s character and the best in the world – followed by the exclamation, “I mean it!”
  • You called out the stacks, noting that they are brilliant and so well curated that browsing is an education in itself and that you always find books that you weren’t expecting and which you end up loving!
  • You called us a paradise, a place for a dynamic celebration of ideas, a place of engagement that touches the soul, and a space for mind, heart, and soul.

The reasons for your loving the stores might be varied, but the passion with which you love the stores is shared. It is what drives you to engage us so deeply. It is what has allowed us to survive over the last 30 years against all odds. And, I imagine, it is why you are here tonight and not somewhere else. 

Why We Need Bookstores 

While there are varied reasons you engage, there are three common motivations we find in most of our patrons: 

  1. You want a place from which to buy books
  2. You want a place in which to browse, consider, and discover books
  3. You want a place that builds and fosters a bookish community 

You want a place – this is important – and we offer you two: the Seminary Co-op and 57th Street Books. 

Over the last year and a half, I have visited bookstores across the globe, speaking with booksellers and their communities about our model and our work, and I can tell you a few things I’ve learned:  

  • The industry, inspired and beautiful as booksellers are, is in serious trouble.
  • Bookstores are cultural goods, and, with very few exceptions, all booksellers must supplement their revenue in order to cover the cost of maintaining their book spaces.
  • The Seminary Co-op is a singular institution. I say this without pride – I would love to be one of many doing this particular work; I state it simply as fact.
  • Our bookstores are world-class, and serve as a beacon to so many.
  • We must establish a financial model to support the work – our singular work, certainly, but also the work of bookselling more generally, if we are to preserve our bookstores.

Why? Well, there are two critical truths we must acknowledge: 

  1. In the 21st century, no reader needs a bookstore to buy books. They can be bought online more cheaply, from warehouses without the overhead of a brick-and-mortar store or booksellers to pay.
  2. Generally speaking, because the margins are so slim on new books and the cost of operating a bookstore so high, bookstores cannot make a living selling new books; in fact, selling books in a good bookstore doesn’t make money – it costs money. And, to be clear, the fact that it costs money doesn’t mean you should spare us that cost. We want you to buy books from us! It is, in fact, our mission. I’ll explain more in a minute.

You don’t need a bookstore to buy books. Do we need bookstores at all? If so, why do you want a bookstore? Again: 

1. You want a place from which to buy books

2. You want a place in which to browse, consider, and discover books

3. You want a place that builds and fosters a bookish community 

Why is this important to state? Because we believe we must build the 21st-century bookstore deliberately, that it will support the work we are hoping it can achieve. That is why, in 2019, after extensive dialogue with you, our community, and after a unanimous vote at our shareholder meeting, we established the first not-for-profit bookstore whose mission is bookselling, which is creating the bookstore itself.

Our model is really quite simple, but in its simplicity, it is as profound as it is radical. The work it centers is the bookstore itself; yes, we are here to sell books, but the goods we are ultimately providing are the browsing experience and the feeling of belonging to a bookish community. 

And so we center the bookstore itself and the professional work of bookselling, without which, our stores would fail as cultural and community centers. You would still be able to buy books, at least until online retailers didn’t need the warehouse space for something more profitable, but what would be lost? 

How do we quantify discovery and browsing, dialogue and community? What is the value of these things? What are they worth? And simply put, what are the costs and how do we cover them? 

We are Not Retailers

Before I answer those questions, I’d like to address a common misperception: when it comes to paying for our work – which means putting books on the shelves, covering operational costs, and paying booksellers a wage that allows them to live where they work – booksellers are not retailers. Sure, we engage in retail activities – we buy and sell things – but our mission isn’t to buy and sell those things for a profit. 

This is a counterintuitive truth, so let me go a bit further in depth. How does our work differ from retail? 

Some of you might think that if we’d just sell books for more than we buy them from publishers, certainly we could find a way, given our fixed and variable costs, to drive enough sales that we could make a living on scale. And you are not wrong to assume so, considering we have been masquerading as retailers for years now.

If we were to engage a retail consultant to help us improve our bottom line, what are some levers they might advise we pull to maximize profitability?  

They would likely ask that we consider sourcing, purchasing, and pricing. But that wouldn’t work in bookselling.

  • For instance, a retailer might competitively source their stock, but not so booksellers.
    • Alas, each book is only available at its steepest discount from its publisher. Most books, unlike most other retail products, are singular and irreplaceable, so like items can’t be exchanged. If we want to stock the latest titles from Penguin Press we can’t go to HarperCollins to get them cheaper. There are no generic-brand copies available of Zadie Smith’s latest novel, much less the scholarship that university presses are publishing. 
  • A retailer might consolidate purchasing, and negotiate with their suppliers on price, another avenue unavailable to booksellers.
    • There are strict anti-trust guidelines in place in the industry that prevent publishers from treating like stores within sales channels differently, and so bricks-and-mortar retail stores, including B&N, are treated as one channel.
  • And then there’s pricing, including market-appropriate pricing, for instance, charging a higher amount for a latte in San Francsico, CA, than one would in Jacksonville, NC.

Imagine engaging a retail consultant – and we have engaged more than a few over the years – here are the pricing strategies they might recommend: 

  • Cost-plus pricing. This is the most common strategy most business retailers use. To do this, simply add a percent-based markup to the product cost. Then, you’ll know what to charge.

Publishers determine the prices at which books are listed, not the retailer. We can sell below list price, but not above list price. So the latte example wouldn’t work for us.

  • Penetration pricing. This is where you initially charge lower prices than your competitors. After that, you gradually increase the price as your market share grows.

This is the strategy Amazon has used, and this precise strategy first devalued books, and then, once Amazon raised their prices, devalued bookstores.

  • Competitive pricing. Competitive pricing is when you keep prices lower than your competitors. 

Again, this is Amazon’s strategy, and they have used this to make books into loss-leaders – products sold at a loss in order to increase sales on more profitable products.

  • Premium pricing. This is when you keep your prices higher without thinking of making them low. Or this means charging more than your competitor, which can make your retail brand more attractive. 
  • Value pricing. This strategy looks at the perceived value of the retail product or service. In other words, it considers how much shoppers will benefit from what you’re offering while considering less quantifiable factors.

These consultants say: try to be innovative if you increase pricing. The “best” selling price must be market- and cost-driven; it should be both high enough to pay expenses and enable you to turn a profit and cheap enough to draw in customers and increase sales volume.

Here are a few more suggestions we’ve taken seriously. I will discuss them in depth shortly: 

  • Reduce inventory to increase profitability of sales by square foot
  • Lower expenses
  • Cut salaries

Bookstores in general can no longer survive purely by selling books as retailers would. The numbers don’t add up. None of the solutions above would work for our store, and I’ll make the case shortly that they don’t work for a more traditional bookstore either.

I want to state this clearly: we’re not doing anything wrong. We’re not missing some quick fix.

We are choosing a model and incorporation that prioritizes cultural, not financial dividends.  

How are we at the co-op substantively different from other bookstores? Let me share some numbers that outline the differences.

  • 99% of the products we sell are books
  • We sell books that sell slowly
  • We sell books from many, many publishers
  • We sell books, especially from small, non-profit, and university presses, with lower margins than what are called trade books – they too, as far as retail margins go, are low. 

Industry Comparison: 

  • Our gross margin is 39% compared to 46.7% in the industry: academic titles
  • Our inventory turn is 1.3 compared to the 2.9 industry average
  • The Co-op sells 99% of books compared to an 81.7% industry average. The 18.3% of non-book items are sold at a higher margin than books. 

Just to linger on this point for a minute, as I know we are all underpaid.

  • The median minimum wage is $26,624, and ours is $34k, which is 28% higher. We start our staff at $33,280, which is 25% higher, and hope to get them to $37,440, which is our career bookseller position (instead of high-turn part-time workers), which is 40% higher. Living wage in Cook County, as of 2019, was $40k.
  • Our ultimate goal is to have all booksellers begin at $47k, which is the minimum wage for exempt employees that the Department of Labor established in 2016, a decision that was reversed prior to its planned implementation in 2017. That was six years ago.  

Bookstores in general can’t make a living selling mostly books and paying staff enough to get by. The numbers don’t add up. 

And what I want to make clear is that even if we acquiesced and implemented every cost-cutting, profit-enhancing initiative a consultant would advise, it wouldn’t work. It would only gut what’s exceptional about our stores and we’d still be in the red.

  • Even with all of those higher margins, non-book items, quicker inventory turn, and lower salaries, the industry Net Operating Profit for stores with a minimum wage above $14 was 1.3% of total sales, 1.2% of which was COVID relief funds, leaving .1%. Many owners don’t pay themselves, which skews the data high.
  • The bottom line is that the current bookselling model is not viable, and the numbers are worsening.

90% of our expenses are almost evenly split between putting books on our shelves and paying our staff. So, clearly, cutting expenses is not the solution either. 

Now, our consultant might say that there simply isn’t a market for the books we carry – those slow-selling books by small, non-profit, and university presses –  and that we are functioning more as a museum than as a store. I know I’m throwing a lot of math at you, but please bear with me as I share a few more numbers that will help explain why this is most certainly not the case. There is a market for these books if we are looking outside a retail paradigm that is meant to maximize profit margin and inventory turn.

We sold 26,871 titles over the last 12 months. Not copies of books but unique titles. Of these titles: 

  • More than 60% (16,207) were single copies
  • More than 16% (4,377) were double copies
  • 76% were for one or two customers 

Of those 26,871 titles, 1,234 titles were on our shelves for more than five years.

Over 6,000 titles – over 20% of all titles sold – were on our shelves for more than a year. Books are generally meant to sell in 3-6 months, which, even that duration, a retail consultant would tell you, is a long time to warehouse inventory.

Think about how long it takes to research, write, edit, publish, and market a book. And then, if the author is lucky, they will have 3-6 months in which to sell the book in bookstores.

We sold titles from more than 400 publishers. 

The top 20 publishers accounted for 80% of the sales. Nearly 4,000 titles were sold by the other 380 publishers. 

(Think about those 4k readers and 380 publishers whose work would not be supported otherwise. And think about those 18k readers who found a book on the shelf that was waiting just for them.) 

Now, I’m just speaking of sales, but remember, our mission is the bookstore itself and our product is the browse. Even before those 20k+ books sold, they were earning their keep on the shelves. Ours are open stacks, and so you, our community, browse those books before they sell. These books are not what retailers would call “dead inventory” – and as an aside, we cull, return, and markdown, well over $100k per year of what we consider to be “dead inventory.” The books that sell slowly are serving a purpose prior to their sale: they are invigorating the browse. 

 As one of our community members and donors, Pat Atkins, wrote, in response to our survey question, “How do you choose your books?”: 

From what’s laid out on the tables and in the stacks at the Seminary Co-op and nowhere else, now. Why? Because I trust your vetted selections of the writers I am and would be interested in. And you offer more of a huge variety of choices than anywhere else. Probably more academic. Plus, I noticed that your community of readers and browsers is delighted to be at the Co-op, sometimes coming from afar, and to share their enthusiasm congenially with each other. 

She’s right, Pat. The relationship between the bookseller and our community is special, and we take our work very seriously.

 We recently announced the publication of the first volume in our first Ode Books imprint of Prickly Paradigm Press: Reading the Room by the brilliant and legendary head buyer at City Lights, and most recent recipient of the Literarian Award from the National Book Foundation, an award that recognizes lifetime contributions to American literature. This will be Paul’s first book; it is as a bookseller that he was recognized with this prestigious award. 

I hope you all pre-order a copy today. The book will be released in April, timed to coincide with Paul’s 75th birthday. We have been circulating some very early drafts as part of a peer-review process, and I’d like to share a reflection I received from our deputy director, Stéphanie d’Hubert, who began her bookselling career in Parisian bookstores in 2004, after attending a French bookselling institute. 

[Paul’s book] does a great job of demystifying the aura of what makes great bookstores and great booksellers. It goes deep to the core: individual and communal joy, curiosity, enthusiasm - TRYING. Caring about the ecosystem of the book, caring about people, being engaged, generous and accepting being cared for.

Reading Paul’s book, she said, “awakens something purely joyful in me, hungry, curious - something that is at the root of why I am a bookseller.” She points to this passage, noting the joy it evokes:

Whatever we end up calling it, the determining factor is: What is the possibility of joy? At the end of the day, that’s what we’re looking for. Current modes of thinking help suppress things that bring us joy. We think of independent bookstores as toolboxes to recover those things, to understand the [ontological] basis for joy for the individual.

Thank you, Paul and Stéphanie.

The Seminary Co-op booksellers take care and bring joy, curiosity, and enthusiasm to their work of building these spaces for you.

Strategic Plan – Finding Alternative Revenue Through the Bookseller’s Work

As I close out, I want to bring this back to you and your role in ensuring these stores thrive for generations to come, and do so without compromising their character, and do so while offering booksellers professional remuneration. 

While I can’t answer why you are here and not somewhere else, I can tell you what you can do to support these stores and help ensure others might discover them – that they will be here in perpetuity.

It’s clear we need alternative revenue sources and a reimagining of the ecosystem of the book in the 21st century – especially the book as a  cultural object, not the commodity that belongs only to the world of media and ephemeral entertainment. 

We have already started conversations within the book industry about how our new model, which is an original channel and can be treated differently than other bookstores, can help support our shared cultural goals – especially among non-profit and university presses. 

We have also been developing our consulting services, working with multiple cultural institutions, and charging for our curatorial and programming work, which historically has been considered paid simply through the margin we make selling books. We are committed to better articulating the value of our work, communicating the cost, and no longer masquerading as a retailer whose operation gross margin alone can support. 

We have been working with foundations, educational institutions, and municipalities to articulate the case for investment in our work, as it will create a more engaged populace, improve dialogue across difference, and, yes, increase property values, as bookstores increase a community’s quality of life. 

But lastly, we’ve been working with you, with individuals who believe deeply in our bookstores. 

But even for those of you who are not spiritually moved by these sacred spaces, there is an economic case to be made for supporting these stores the way communities support their cultural institutions: funding their work. 

224 of you donated to this year’s annual fundraising campaign, giving, an average of $150, which is $12.50 per month. Thank you. Ours is a ¾ of a million-dollar annual deficit. If only half of our nearly 10k members who shopped with us last year gave $150 per year to support our work, we would be solvent. If all of you gave $150 per year to support our work, we would be able to pay professional salaries and return to our pre-pandemic levels of inventory.

Last I checked, a Prime Membership at Amazon is now nearly $150. If you have an Amazon Prime Membership – and there are many good reasons why you might – perhaps think of it as the equivalent of a carbon offset. If not, perhaps think of it as you would other public goods, like WBEZ or your Art Institute membership. 

Conclusion

As I round out my tenth year leading the Co-op, I’m feeling quite optimistic. Why? Because we’ve made it through a move, multiplying financial crises, a global pandemic that took half of our business, and are now operating within a structure that prioritizes our mission. And because today, I am proud to work with one of the most inspired groups of booksellers I’ve had the privilege of serving with in nearly 30 years of bookselling. And most of all, because of you. Because you are here and not somewhere else. Because you care. Because you bring your joy, your curiosity, and your enthusiasm to these spaces. 

I have been critiqued for being a bit of a mystic about the purposes of this store – and I accept that critique, if by mystic is meant an enthusiast. Trust me, I know the ways in which I and my mysticism can be a bit much at times, but I also know that it is precisely the ineffable quality of our work that makes these bookstores great treasures: beacons of hope and joy for so many.

This store is an act of love for and by our community. And even if you don’t believe that, I’m certain you believe they are worth preserving for generations to come.

Thank you for your support. I’m keen to hear your questions and continue the conversation.

IV Community Q&A