RFI- Price Optim App.doc

Dear Sir or Madam, 19 Mar 2012 The Army and Air Force Exchange Service (AAFES) is requesting information from the industry regarding their interest in providing a cost effective retail Price Optimization Application. The intent of this RFI is to determine vendors who can meet our desired requirements and conduct a pilot for a specific category of merchandise to allow the Exchange to evaluate the vendors application. Pricing Optimization is used to determine the optimal regular price of an item (that is not promoted or marked down). It combines top-down pricing rules such as everyday low price with science and predictive analytics to help merchants determine the regular selling price of an item.

AAFES is a joint military activity providing quality merchandise and services to active duty, guard and reserve members, military retirees and their Families at competitively low prices AAFES returns earnings to the Army and Air Force to improve troops’ quality of life and to provide a dividend to support MWR programs with revenues in FY10 totaling $9.9 billion. AAFES operates more than 3,100 facilities worldwide, in more than 30 countries, five U.S. territories and 50 states.

If you are interested in responding to this RFI, please provide:

1. Responses to the desired requirements outlined in Attachment 1.

2. Provide budgetary pricing and a high-level schedule for completing a pilot of your Price Optimization Application.

Your responses may be used to further evaluate and/or refine future requirements.

Please feel free to add any additional information that the Exchange needs to consider for a Price Optimization Application.

Again, this is a Request for Information only. The Exchange is not seeking a firm price quote. However, the Exchange does want to understand how the industry prices these solutions.

Responses to this RFI are required by close of business 18 Apr 2012 via email to: flemonsa@aafes.com and Smeby@aafes.com.

Sincerely

Attachment 1: Price Optimization Application

Requirements ///signed///

Antalon Flemons Contracting Specialist Attachment 1

Request for Information (RFI) – Price Optimization Application Current Requirement:

The Exchange seeks to find a vendor who can provide a cost effective retail Price Optimization Application. The intent of this RFI is to locate vendors potentially interested in piloting a category of merchandise to evaluate their pricing application.

Pricing optimization is used to determine the optimal regular price of an item (that is not promoted or marked down). Pricing elasticity, predictive analytics and optimization are combined to determine the optimal price based on a set of business goals (such as maximizing margins, sales dollars and unit volume). Price optimization usually combines top-down pricing rules such as everyday low price (EDLP) with science and predictive analytics to help merchants determine the regular selling price of an item.

The highly competitive retail environment requires that the regular price be initially set and then modified using sophisticated rules to ensure that each product remains competitive but also a profitable component of the assortment. Pricing rules are used to ensure image and operational requirements, such as the way prices must be implemented — for example, regular price products must end in 0.89 or no more than 10% of an assortment can have a regular price change per week, or certain items must be priced as competitively matched (e.g., price = competitor -5%).

Pricing rules must also deal with minimum advertised price (MAP) constraints, which limit the frequency, time period and amount of discount that can be offered based on manufacturer controls.

The cross-channel shopping behavior shown by consumers adds further complications. As a result, price is ideally optimized across channels so consumers will view the same regular price regardless of where they browse or purchase.

Objective:

Ultimately, the Exchange seeks to implement a price optimization application. The intent of this RFI is to gather information about potential vendors and each company’s ability to meet the needs of the Exchange. A high-level requirements chart is below. The vendor should be able to provide a solution, which meets each required feature.

Responses:

Please respond to the following questions for each of the items listed in the table below. Indicate whether your system provides the functionality natively (out of the box), with configuration, with minor customization, with major customization or not at all.

1. Explain the archive history capability and capacity.

2. Explain what calculations your system performs.

3. Explain how the system allows the administrator to customize required fields/attributes as a method to control user input discrepancies.

4. Describe any validation for spreadsheet or CSV file data.

5. Explain the type of AD-hoc reporting capabilities on a user level basis.

6. Does the system allow the administrator to set up audit trails for any changes to data (by user, time, or other designation)?

7. Describe the typical implementation timeline for a retailer of our size (1 million SKU’s, dozens of departments/categories (i.e. grocery, fashion, hardlines, consumables, electronics, etc).

8. Describe the implementation and installation process.

9. Explain support, including upgrades and conversions.

10. Provide an architectural overview of the software.

a. List operating systems supported

b. List databases supported

c. List networking environments and protocols supported

11. Provide a list of client references.

Pricing:

Please respond to the following questions regarding pricing. In your response, please provide industry or list prices.

1. Licensing Fee (dependent on users? Dependent on company size?)

2. Annual Support and Maintenance

3. Setup fees

4. Other costs (Reports, Interfaces, Conversions, Extensions)

5. Average additional costs borne by other users of your software (i.e. typical staff additions, peripheral hardware and software needed to support the tool, etc).

6. Estimated implementation time? (Include a high-level project schedule showing major milestones and/or deliverables)