So, you’ve decided (or your CEO, or another senior leader, has decided) that it’s time to make an investment in retail technology. You’re not alone. A recent Retail Systems Research study revealed that about 72% of retailers plan to increase IT spending over the next three years. The percentage of revenues allocated to IT spending seems to be rising, as well. While 1% of revenues was once a common rule of thumb for technology spend, the study found that 67% of apparel retailers spend at least triple that amount on IT.
Retailers today have no choice but to innovate and modernize their processes to keep up with growing global competition and constantly connected consumers. Since retail technology is often a complex purchase, affecting stakeholders across the organization, and requiring significant investments of time, resources, and capital, a formal RFP is often (although not always) part of the purchase process. In this article, we share our best tips for writing a flawless retail technology RFP and running a painless RFP process.
What is an RFP?
Whether you’re looking for point of sale, merchandising, demand management, customer engagement, or e-commerce solutions, or a full suite of retail technology, an RFP may be something to consider. RFP stands for request for proposals and simply put, is a document that outlines the needs that you have related to the project or purchase at hand.
What’s the difference between an RFP and an RFI?
Whereas RFP stands for request for proposals, as we covered in the section above, RFI means request for information. RFPs tend to go much deeper into detail than RFIs and require more commitment and involvement from the vendors who choose to respond. RFIs often return more standard marketing verbiage and collateral, whereas RFP responses are typically tailored very closely to the specific needs of the requesting company.
Who should be involved in the RFP process?
While there is usually one person or team elected to run the RFP process, that doesn’t mean that they work alone. A typical retail technology investment will cause some level of disruption across various departments in the organization, so representatives from all internal stakeholders should have a say in the process and document. For example, the CIO’s team may be responsible for selecting a new point of sale software, but representatives from store operations, marketing, customer service, finance, and others may need to be consulted on the requirements and in the vendor evaluation and selection.
It is not unusual for external consultants to be hired as part of the RFP and vendor selection process. Although they come at an added cost, some retailers lack the resources, experience, and skills to make a selection independently, and can benefit from the added insights a consultant or consulting group may provide.
Aside from internal stakeholders, you may also have a trusted advisor – a peer, or mentor who can provide some valuable input to make sure you’re asking all of the right questions in your RFP.
What should I include in my retail technology RFP?
It can seem daunting to start your RFP from scratch, so if you’ve thought about using a template, you’re off to a great start: a quick Google search will yield lots of good options for RFP templates. If you’re an NRF member, they also provide standard RFPs for various retail technology solutions.
Proceed with caution with templates, though. Every business is unique, and while starting with a template can give you a firm foundation, you will always want to tailor it to your specific needs. It may seem tempting to leave in questions about features you don’t really need, but that can distract you from your ultimate goal and cause confusion and clouded judgment.
What makes an RFP effective isn’t its size or depth, it’s the quality and relevance of the questions and content. Less is often more, so don’t include what you don’t need. If it’s not relevant to your business, it has no place in your RFP. However, do include what you may need in the future. You may not know where your business will be in five years, but there’s a good chance the retail technology you choose today will need to sustain your needs well into the future, so try to be as forward-thinking as you can.
As you jot down your requirements, you may want to consider a scoring key (which may or may not be exposed to the vendors). Since not all requirements carry the same importance to the organization and project outcome, you may want to weigh them accordingly.
Here’s a sample outline for a Retail Technology RFP:
- Company overview and background
- Project overview, objectives, desired outcome
- Technical landscape, integrations, etc…
- Functional requirements
- Technical requirements
- Investment summary
What should the retail technology RFP process look like?
Once you have drafted your RFP, involving all the key stakeholders, it’s time to release it to the vendors. Ideally, this is not the first time you’re meeting these vendors. You’ve done some pre-work to validate the fit at a high level, check out reviews, looked at their marketing collateral and website, and even established a relationship with an account executive to start getting to know each other. There’s no sense in including vendors in your RFP process if you know from the start that they won’t be a good fit for your needs.
After issuing your RFP, you should give vendors an opportunity to ask clarifying questions. This should be a controlled process, with a specific start and end date, and specific instructions to the vendors on how to submit questions. Some companies may choose to expose all of the questions and answers anonymously to all vendors, whereas others prefer to answer questions on a one-to-one basis.
After the RFP submission deadline, you’ll need some time to evaluate the responses, ask for additional information or clarification from respondents, and make your short list. Then, it’s time for any additional meetings that will help inform your decision: demos, pricing discussion, project planning, reference calls, etc.
Pay close attention not only to the content of the RFP responses you receive, but also to the responsiveness and tone of the people you come across during the entire process. This can give you great insights into the culture and brand experience you’ll have if you decide to move forward with a particular vendor.
Is an RFP a required part of making a retail technology investment?
In a word, no. It can be helpful to document your requirements in a standardized way that makes comparing vendors easier, but an RFP is only one tool out of many that you can and should use when deciding on a partner for your retail technology investment. It doesn’t replace doing your due diligence in speaking with other customers, seeing and sometimes trialing the software, meeting with various people in the organization, and more. While one vendor may look good “on paper”, based purely on their written RFP response, that doesn’t mean that the organization will ultimately be the right partner to support your objectives and vision. Consider using an RFP as a part of an overall selection process, but don’t rely on it as your one true measure of the vendor’s fit for your needs.