Last month the Church announced that it will close about a dozen Distribution stores this year (and more over the next few years) and instead sell materials through Deseret Book outlets. The move continues and expands a two-year-old program that started with Deseret Book stores in Ogden, St. George, and Salt Lake City, Utah, Idaho Falls, Idaho, Las Vegas, Nevada and Portland, Oregon. The Church’s Distribution Services says that the arrangement is more convenient for shoppers and is more efficient.
In general, the move does make sense, just like consolidating competitors in neighboring stores often makes sense. Even if Deseret Book doesn’t make any profit on the church distribution sales, the move could bring additional traffic into Deseret Book stores. Why not add an inspirational book or Greg Olson print to your purchase of garments? Its good for everyone, isn’t it?
Thinking about this, you might ask why there is any distinction at all!
As far as I can tell, at least one of the answers is U.S. tax law. LDS Church Distribution Services is part of the Church’s non-profit operations. In order to maintain its non-profit status under U.S. tax law, the materials it produces and distributes are priced on a non-profit basis, far lower than comparable for-profit materials.But, the Church doesn’t have to pay any taxes on its revenues. As a result of all this, LDS Church Distribution Services charges the same amount to consumers as it does to retailers (i.e., to stores), meaning that stores either don’t make any money on distribution materials they carry, or they must increase the price they charge for distribution materials to more than what the Church charges.
In contrast, the book publishing operation of Deseret Book is a for-profit operation whose products are priced normally. As a result, Deseret Book (the publisher) can give stores a discount that allows them to make money while charging consumers a price based on the book’s list price. Deseret Book, or is parent company, Deseret Management, pays taxes on the profits it earns before turning those profits over to the Church.
As near as I can tell, Deseret Book’s stores are not making any money on the LDS Distribution materials they sell, and are instead getting just whatever benefit might come from additional traffic in their stores. Perhaps the company may also get some kind of recognition from the Church for the benefits the Church gets from not needing as many LDS Distribution outlets and volunteers. For what its worth, this also means that there is little keeping other LDS bookstores from carrying most LDS Distribution items, except for, perhaps, garments. The books and videos that LDS Distribution sells can be purchased at the same price that Deseret Book pays. Like Deseret Book, however, these stores would either have to sell the items at cost, and not make any money on them, or mark up the items and charge more than distribution. [This has long been the case, as understand it.]
What becomes confusing in all this is any distinction between the materials published by LDS Distribution and those published by Deseret Book. In general, the materials published by LDS Distribution are those that are part of regular worship in the Church—Scriptures, manuals, etc. And those published by Deseret Book are more commercial in nature.
But I’m not sure that this line is clear to everyone. When consumers purchase materials at a Deseret Book, is it clear what materials are published by the Church? and what isn’t? Is that important?
When I talk to most consumers, they have little or no idea of who the publisher of a book is. They connect to the text, and usually recognize who the author is, especially if the author is well-known. I must admit that even I, as involved as I am in the industry, I often don’t know who the publisher of a book I own is.
Distinctions between publishers are then more important to those in the industry—booksellers, reviewers, etc. Inside the industry, employees use the distinction as a way of comparing who has done what, and who is more successful. The information is, of course, necessary for booksellers to determine where to purchase a book, and who to contact if there is a problem or if the book needs to be returned. But even some of this is of little importance in the case of LDS Distribution.
Still, despite all this, there is something uncomfortable about this agreement. I can’t help feeling that this increases the likelihood that anything sold in a Deseret Book store is somehow approved by the Church, giving Deseret Book an advantage over other stores. I believe that this is already a wide-spread belief. In addition, I have to wonder if this same policy is also available to other LDS stores. Can I sell garments also in my store?
I suspect that its not quite as simple as being willing to sell garments at cost. The Church wants some control over who sells garments and how they do it. And there may be a consumer perception that it wants to maintain. Still, I wonder about the perception of fairness and of Deseret Book’s role. Should those perceptions also affect this policy?