UNC Student Stores could be outsourced to private company

With balloons and birthday cake for everyone, the UNC Student Stores celebrated an auspicious occasion on Sept. 1, something rare for any retail establishment – 100 years in business.

On Saturday, when the Tar Heels play Illinois in football, alumni will stream through the store to buy Carolina blue trinkets. For generations, UNC-Chapel Hill students have shopped at the store for T-shirts, toothbrushes and textbooks.

Now, though, the beloved store’s centennial year may be its last as a university business.

Soon, UNC will put out a request for proposals to private companies to take over the operation. Offers would be considered in the coming months by a campus review committee, said Matt Fajack, vice chancellor for finance and administration.

Already there is an interested buyer. Follett, which owns college bookstores across the country, is one of two major players in the sector, along with Barnes & Noble. Follett sent a letter of interest to UNC about six weeks ago, Fajack said.

Fajack emphasized that no decision had been made to privatize the store, but a three-page partnership proposal from Follett outlines some parameters for a deal – including an annual commission to UNC of at least $3 million based on sales. The company said it would put $2.5 million toward store renovations and spend $200,000 on marketing each year.

“They expect to be able to pay us significantly more than we receive from the store now,” Fajack said.

Follett also made promises about buying back books, stocking used books and implementing a cheaper textbook rental system. “We estimate that we could save your students several million dollars a year on course material,” the proposal said.

The letter proposed hiring the current bookstore employees for at least a year, “plus offer them a tremendous opportunity for professional growth.”

The prospect of privatization has store employees fearful for their jobs and mourning what could be the loss of a UNC family atmosphere, said John Gorsuch, director of UNC Student Stores.

“They’re taking it pretty hard,” said Gorsuch, who has 30 years of experience at the store. “We’re trying to keep a happy face and still give good service here.”

The store has 49 full-time employees and 200 students who work part time through the year. Gorsuch said he’s been inundated with calls of support from faculty and others.

“We’re kind of like a big mom and pop store here, you could say,” he added. “We’re not just a chain store of a big corporation based out of New York City or Chicago. There’s a more hometown flavor here.”

The operation is entirely self-supporting, he said, and has generated $27 million in student scholarships in the past 60 years, including $400,000 last year.

The store may have a homespun vibe, but it’s a sophisticated operation with a tech shop, post office, print shop, the Bull’s Head Bookshop and soon, a pharmacy. The store recently installed solar powered umbrellas outside with cellphone charging stations.

Toni Horton, the store’s accounting manager, said the store pays student employees starting at $8.95 per hour. They get valuable experience and mentoring on the job, she said.

The store is financially solid, she said, with a black bottom line and the ability to pay its debt from a renovation several years ago.

“We don’t take from the university,” said Horton, who has 12 years of experience at the store. “We give to the university, in many ways.”

Several UNC campuses have privatized their bookstores in recent years. Fajack was chief financial officer at the University of Florida when its bookstore was taken over by Follett.

He said the Follett commission would pay for scholarships that would otherwise require a multimillion-dollar endowment. “We’d be jumping up and down for joy if we got a $40- or $50- or $60-million endowment,” Fajack said.

Bookstore employees are skeptical of Follett’s claims. They say the UNC store gives students competitive prices and caring service.

Other UNC employees are watching the deal closely, said Charles Streeter, chair of the Empoyee Forum staff group.

“More needs to be done in order to keep the talented people who are working at the university and put their heart and soul in working here and being part of the community,” he said, adding, “It needs to come from the top.”

Streeter said store employees, many of whom are vested in the state’s retirement system, didn’t pursue jobs in the private sector for a reason.

“They signed on to work at UNC-Chapel Hill,” he said.

This story was originally published September 18, 2015 at 8:10 PM with the headline "UNC Student Stores could be outsourced to private company."