- Oops!Something went wrong.Please try again later.
Barnes & Noble Education CEO Mike Huseby joins Yahoo Finance to discuss the impact of COVID-19 on higher education and remote learning.
AKIKO FUJITA: Mike, it's good to talk to you. You've got five predictions out going into 2021 for higher education. But I want to first start with the top here, which is this focus for students on ROI, the return on investment. Because it does feel like this is a year where a lot of students really reassess the tuition that they pay and the value that they get for that, especially with so many classes being taught online.
MIKE HUSEBY: Yeah. No question, Akiko. It's a new conversation between the school, the students, and the parents, and anybody involved in higher education right now. The value of higher ed has been brought into question, especially this year as there have been so many changes that have accelerated the questions that are being asked. The relationship between students and the institutions, the schools that we serve, we serve about 775 physical store and website campuses, and another 600 virtual campuses. About six million students at Barnes and Noble Education, or BNED.
And if you talk to the leaders of these schools, they have a totally different attitude in terms of how they're interacting with students. It's very important for them to listen to them and prove that they're providing value.
- Mike, when you think about that value component as we've been talking about, this so-called ROI, how do institutions, and as you heavily depend on those partnerships to really generate your own revenue, how do they really sell that argument, especially perhaps to low income families, perhaps to families that have been ravaged the most during this pandemic as they try to recalculate what the future will look like?
MIKE HUSEBY: That's a great question. I think there has to be a shift in focus. Affordability has always been important, especially the last few years in terms of the objectives of the schools we serve. But it has taken on a new meaning. We try to contribute to that by trying to provide learning materials and also through our stores, different merchandise that schools want at the most affordable cost. We're packaging things differently. We're trying to listen to the students and make sure that first generation students, nontraditional students, are served by what we do and what the schools do, not just the traditional kind of 18-year-old coming out of college.
What that means is that schools are reducing learning materials cost by bundling them with tuition so they can save 40% to 50%. Those are real savings. So cost is a big aspect. Access is a big aspect. We're trying to put products in so that all students, regardless of their socioeconomic status, have all their learning materials on the first day at that discount. Researches show that your outcomes are much better if you all start out at the same spot on day one of your college experience.
AKIKO FUJITA: And on that point, you've talked about the need for more inclusion as well. That's a conversation that has been happening within universities. One of the other things you talk about is the student experience, how that's being redefined. And I can't tell you how many college students I spoke to throughout the pandemic who have said, look. We don't go to college specifically just to get classes online or just to go to class. Part of it is the networking that happens on campus, the socializing that happens on campus. That's what you pay the $40,000, $50,000 for.
How do you think that's going to shift as a result of what has played out so far in the school year? And what does that new college experience look like?
MIKE HUSEBY: Well, I think the new experience is, the changes that have occurred during COVID, some of them are here to stay. I think there's much more of an opportunity now to go to a combination of in residence learning coupled with virtual learning. That can be more cost effective. And in some cases, depending upon the area of study, it might be a better way to teach and learn. Although, recent studies have shown that most students strongly prefer an in residence college experience.
There are certain skills based and other courses that really lend themselves to virtual. Even the schools that are really pushing online learning will tell you that within the next five years, virtual may account for maybe 20% to 25% of learning. So we expect to see a return, a swing of the pendulum back to more physical instruction and learning next fall.
The vaccines give us hope to be optimistic. And schools are taking measures. I talked to the president of one large private school. They spent almost $100 million just on COVID during the last nine months just trying to make sure testing, and tracing, and setting aside space for students that are affected. It has been a tremendous effort on the part of the schools across the United States to try to create an experience that's good for students.
- And Mike, just kind of honing in a little bit on your business. When you think about, you mentioned you have 760 stores across college campuses, I think 52 as of now are still closed. And as we talk about this broader discussion of the fact that perhaps the morale or school pride may not be in effect. So it's not only books, right? Or notebooks. It's t-shirts, it's paraphernalia, it's all of that sort of accessory component that your business really depends on. Can you give us an update there on just how your employees are doing at this time and what your forecast is as you look to 2021?
MIKE HUSEBY: Yeah, definitely. I mean, our first priority is the health and safety of our people, and not just our people but the students and everyone else that visits our stores. And as you know, when COVID came in March and April in a big way, we shut down most of the stores to be in sync with the schools and their policies in terms of restricting access to the campus.
The fact that only 52 are closed right now, many of which are in California because of the way that state has operated with its state system, it says something for the dedication of our people. And also, the flexibility, the adaptability of the schools who are doing everything they can to try to bring things to a near normal experience while being very cognizant of the health and safety.
So in terms of our business, we're really focused on moving forward on e-commerce as well as in physical stores. We just did a strategic partnership with Fanatics and its affiliate, Lids, which is a game changer for us. Buying habits are changing permanently to more of an e-commerce model. We already have an e-commerce system. But this lets us leapfrog what we did have in terms of as you referred to, general merchandise like t-shirts and sweatshirts.
The things that are really important to us as a college hub, we're a community hub for the school that reflects the brand of the school, the personality of the school. None of that is going to change, but Fanatics will build on the great retailing foundation that we have to make sure that the schools are getting more money in their pockets because we share all the revenue that we get from everything we sell with the schools.
So that's an important point. Schools are in need of funding. And the way we contract with the schools, we have a revenue share model. And so we're trying to drive business within our contracts because the schools need that funding.