Omni Talk Retail: Episode Summary
Title: What A True Omnichannel Returns Process Looks Like With TGW’s Stipe Galic | Ask An Expert
Release Date: April 16, 2025
Host/Author: Omni Talk Retail
Guests: Stipe Galic, VP of Business Development and Marketing at TGW
Hosts: Chris Walton and Anne Mezzenga
Introduction
In the April 16, 2025 episode of Omni Talk Retail, hosts Chris Walton and Anne Mezzenga delve into the complexities of managing retail returns in an omnichannel environment. They are joined by Stipe Galic, the Vice President of Business Development and Marketing at TGW, a leading provider of warehouse automation and robotics solutions. The episode titled "What A True Omnichannel Returns Process Looks Like With TGW’s Stipe Galic | Ask An Expert" provides in-depth insights into optimizing the returns process to enhance profitability and efficiency for retailers.
Guest Background: Stipe Galic
Stipe Galic brings over two decades of experience from TGW, a company founded over 50 years ago in Austria, which has grown into a billion-dollar enterprise with a strong presence in Europe and the US. Stipe's journey with TGW began directly after school, progressing from mechanical engineering roles to leading parts of the R&D organization. Recently, he has been spearheading TGW's expansion in the US, focusing on boosting brand awareness and establishing TGW as a key player in the American retail automation market.
Notable Quote:
“I'm telling the stories and I have fantastic people who can do great stuff.”
— Stipe Galic [04:25]
The Challenge of Retail Returns in an Omnichannel World
The conversation begins with the acknowledgment that returns are a significant pain point for omnichannel retailers. Stipe attributes the rising challenges primarily to the shift towards an omnichannel approach, which integrates both online and offline channels but introduces complexities in handling returns.
Notable Quote:
“If I would choose just one word, it is because of omnichannel.”
— Stipe Galic [05:15]
Stipe explains that omnichannel operations require seamless integration between different channels, leading to intricate backend processes. Traditionally, retailers had separate distribution centers (DCs) for store replenishment and e-commerce, often leading to fragmented operations and inefficiencies in handling returns.
TGW’s Solution: Integrated Distribution Centers
TGW offers a holistic solution by creating unified distribution centers capable of managing both retail and e-commerce operations under one roof. This integration allows for more efficient processing of returns, enabling quick reintegration of returned goods into inventory, which is crucial for maintaining inventory accuracy and meeting service level agreements (SLAs).
Process Breakdown:
- Inspection and Sorting: Returns are inspected and sorted into mixed SKU totes rather than single SKU to minimize handling time.
- Immediate Allocation: Mixed SKU totes containing multiple items allow for faster reintegration into inventory.
- Flexible Picking Strategies: Depending on performance needs, TGW's system can adjust between single SKU picks and mixed SKU picks to optimize throughput and responsiveness.
Notable Quote:
"We can always balance this out to make sure that the system performs in the best possible way and gets the items out of the door, which is in the end the most important thing to me to meet the SLAs."
— Stipe Galic [07:15]
The Role of Software in Managing Returns
Stipe emphasizes the critical role of software in orchestrating the returns process. Advanced software solutions analyze cycle times, pick rates, demand, and volume movements to make informed decisions on whether to allocate returns from current inventory or dedicated return stocks.
Notable Quote:
"Software plays a big role in there... choosing, you know, what's the right thing based on the output and the SLAs."
— Stipe Galic [09:58]
This software-driven approach ensures that returns are processed efficiently, maintaining high inventory turnover rates and ensuring that returned items are quickly available for resale.
Case Study: Urban Outfitters
An exemplary case discussed is Urban Outfitters, a TGW client that embraced a true omnichannel distribution model. By merging their retail and e-commerce DCs, they significantly improved their returns process.
Implementation Highlights:
- Unified Storage: Returns are stored in mixed SKU totes, facilitating rapid reintegration into inventory.
- Automation Enhancements: Introduction of automation reduced manual touches, streamlined processes, and improved throughput.
- Workforce Transformation: The automation-friendly environment at Urban Outfitters' DC became a desirable workplace, attracting talent and reducing hiring challenges.
Notable Quote:
"With your solutions and automation, you have built in, I have a queue of people waiting outside of distribution center saying hey, I really want to work with there."
— Stipe Galic [19:56]
Strategic Recommendations for Retailers
Stipe offers strategic advice for retailers aiming to optimize their returns process:
- Adopt a Holistic View: Integrate all operational flows to minimize fragmentation and enhance responsiveness.
- Leverage Automation Gradually: Start with software solutions to manage inventory and returns efficiently before scaling up with more extensive automation.
- Maintain High Utilization: Ensure that automated systems are utilized to their full capacity to maximize ROI.
- Focus on Seamless Integration: Prioritize systems that integrate smoothly across all channels rather than isolated automation solutions.
Notable Quote:
"It's about being agnostic and making sure it's placed seamlessly together... what's more important than to have the best possible automation in one segment."
— Stipe Galic [23:29]
Impact on Operations and Profitability
Implementing TGW’s integrated approach leads to substantial operational and financial benefits:
- Cost Reduction: Automation and efficient returns handling can halve the cost per piece processed.
- Space Optimization: Unified distribution centers require less physical space, reducing overhead costs.
- Enhanced Workforce Satisfaction: Automation creates a better working environment, making roles more attractive and reducing turnover.
- Inventory Accuracy: Rapid reintegration of returns ensures accurate inventory levels, minimizing excess stock and improving cash flow.
Notable Quote:
"If you look at the cost per piece... they cut it nearly by half by doing that."
— Stipe Galic [19:41]
Future of Omnichannel Returns
Stipe underscores the necessity for retailers to continue investing in flexible, integrated supply chain solutions. The ability to adapt to unpredictable market conditions, such as sudden shifts between retail and e-commerce volumes (e.g., during the COVID-19 pandemic), is crucial for maintaining competitiveness and profitability.
Notable Quote:
"The main driver for that is really the unpredictability of it."
— Stipe Galic [22:01]
By adopting a bridge-like system that seamlessly integrates all channels, retailers can ensure continuous, efficient operations regardless of external fluctuations.
Closing Insights
The episode concludes with Stipe highlighting the industry's shift from prioritizing cutting-edge technology to valuing seamless integration. Modern retailers recognize that integrated systems provide greater flexibility and profitability compared to isolated technological solutions.
Notable Quote:
"Today it's seamless integration. Looking five, six years back, this was completely different because everybody was chasing cutting edge technology."
— Stipe Galic [24:09]
Chris Walton echoes this sentiment, emphasizing the enduring importance of the omnichannel approach in retail operations.
Final Quote:
"That's a great nugget to end on because, yeah, back in the day, like the business model wasn't evolving to the degree it is."
— Chris Walton [25:00]
Connecting with Stipe Galic
Listeners interested in further insights or collaboration with TGW are encouraged to connect with Stipe Galic on LinkedIn for more information and direct engagement.
Conclusion
This episode of Omni Talk Retail offers a comprehensive exploration of handling returns in an omnichannel retail environment. Through the expertise of Stipe Galic, listeners gain valuable strategies for integrating distribution centers, leveraging automation, and utilizing software to transform returns from a logistical challenge into a profitability avenue. The discussion underscores the evolving landscape of retail supply chains and the critical importance of seamless, flexible operations in achieving long-term success.
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