Merchandising Your Way to a Touchdown

After months of proposals for a lower estate tax exemption amount and the possibility that exemption would come down before there was time to make gifts, the time for action has arrived. Fortunately, only a few of the newly proposed rules will impact moves made before new rules are passed, with many taking effect after Jan. 1, 2022.

The proposed rules would eliminate the increased estate and gift tax exemption created by the 2017 Tax Cuts and Jobs Act that doubled the amount of an estate that is exempt from tax. Accelerating changes that were already slated to occur beginning Jan. 1, 2026, after Jan. 1, 2022, the unified estate and gift tax exemption would be reduced to $5 million, adjusted for inflation. Significant changes have been proposed impacting the treatment of assets transferred to a “grantor trust.” Grantor trusts are trusts where the creator, or grantor, is treated as the owner of the trust’s assets for federal income tax purposes.

As an owner, the grantor pays the income tax on the trust’s assets on behalf of the beneficiaries and can sell assets that may qualify for a discount, such as a non-voting LLC interest, without paying any income tax on the sale.

Because the grantor is considered to be the trust’s owner, transactions between the trust and the grantor are “disregarded,” meaning the assets can be sold or exchanged without triggering income tax consequences.

In other words, the grantor can continue to pay income taxes associated with the trust assets without that tax payment being considered a “gift” to the trust, thus allowing the trust to grow incometax free and further reducing the grantor’s estate.

Fortunately, grantor trusts remain available as estate planning tools with all of the benefits continuing.

Under the proposed legislation, the highest marginal estate tax rate would remain at 40%. Although no changes will be made to the generation-skipping transfer (GST) tax, the GST exemption would be reduced to $5 million adjusted for inflation.

Most importantly, there is no mention in the proposal of death triggering gain or the elimination of basis step-up at death. Currently, each individual can transfer up to $11.7 million without incurring federal gift, estate or generation-skipping transfer taxes.

Set by the Tax Cuts and Jobs Act of 2017, and adjusted for inflation every year since, under the proposed legislation, the exemption amount would be reduced to $6.02 million after Jan. 1, 2022.

ACT NOW

Any convenience store owner, operator, franchisee or executive with an existing trust who is considering making changes should do so now since the new rules will treat decanting — that is changing the trust terms or pouring the trust’s assets into a new trust with modified terms — as a distribution that might be labeled as a gift and subject to the gift tax.

Fortunately, only a few of the proposed rules will impact transactions or transfers made before it is passed, with many not taking effect until Jan. 1, 2022. While the many benefits of trusts remain invaluable, now is the time to act on estate planning. CSD

MERCHANDISE YOUR WAY TO A TOUCHDOWN

C-store operators can strategically merchandise with end caps and promotional zones on the way through ‘the field’ of the store to help customers increase basket size along their journey.

Tom Ross • Ross Co.

It’s football season, so let’s approach in-store merchandising, layout and adjacencies in the context of football.

Guests entering your store most often have a primary need (goal) in mind when they arrive. It’s likely this goal falls into one of three categories — hungry, thirsty or comfort. Think of them finishing the quest to satisfy these needs as the “touchdown” and their journey intercepting prepared food or beverage purchases as a twominute drill. Let’s name our guest Drew. Drew enters the playing field, and after moving a few paces into the store looks up to determine the targeted objective, which is likely to be a destination and primary purchase occasion tied to either foodservice or the cold vault. Note that the moment Drew looks up, she is already well past merchandising space, which should be reserved for low-frequency and sought-out purchases (example: oil/automotive).

Think of the middle third of the store as the red zone and the back third of the store as the end zone.

Destination-driven departments, consisting of high-frequency categories to satisfy hunger, thirst and/or comfort should be strategically placed along the perimeter walls in or close to the end zone. If you have a signature offering, consider placing this under the goal posts (center of the end zone).

Therefore, as Drew breaks from the landing zone inside of the front door to the desired objective, it is incumbent on us, as merchants, to take offensive measures of our own, strategically merchandising end caps and promotional zones on the way through the field.

Merchandising along the path to the end zone is best reserved for adjacent products or those secondary to the primary purchase occasion and/ or related impulse items. Examples of this are: single servings of chips or a 12-pack promotion on the way to the beer cooler, healthy snacks and upscale drinks on the way to the foodservice destination, or bakery and healthy snacks on the way to the coffee and hot dispensed drinks.

Once Drew reaches the goal line, satisfying the primary need for the store visit, we need to prepare for the second half — the journey back through the store to the checkout.

THE SECOND HALF

If the primary reason for the store visit was to satisfy thirst out of the walk-in cooler, we should be thinking of which way to hinge the doors. Swinging the doors properly can drive Drew further into the store and set up secondary purchase occasions. This is accomplished by carefully planning category adjacencies in the store layout process. A good sightline to the foodservice offering is also desirable in this example, creating the opportunity to change the needs dynamic from thirsty to hungry.

If the primary reason for the visit was foodservice, we should be planning for adjacent dispensed drink purchases (hot and cold) and/or related and secondary food purchases such as healthy snacks, salads, chips, dessert and selective packaged beverages as Drew steps away from the counter with the mission accomplished.

With the touchdown (primary purchase) and the extra point (secondary/adjacent purchase) in-hand, we should have the return trip to the opposite goal line (cash wrap — or just walkout/checkout) carefully curated to strive for a tertiary purchase occasion. This merchandising can be an assortment of well thought-out and placed adjacent and impulse items. That leaves us with the checkout counter. This area serves both customers shopping in-store and those only paying for fuel, lottery and/ or tobacco products merchandised at the counter. In either event, this is a great place to create an impulse purchase. Avoid confusion/clutter here and feature a taste of your signature offer or high ring/margin impulse items on or near the counter. Make it easy to score for a win-win. Finally, remember merchandising, like football, is a team effort — having the merchandising and operations teams huddle up together to plan category layout and adjacencies can be a powerful tool.

5th BI-ANNUAL

CONFERENCE SAVE THE DATE!

January 17–19, 2022 Our upcoming Women in Carwash™ conference will be held at the beautiful B Ocean Resort in Fort Lauderdale, Florida

For more information and to register please contact:

Andrew Klukas

phone: 1.778.772.3057 Tom Ross managed store design and layout email: andrew@womenincarwash.com for both Mobil and ExxonMobil “On the Run” convenience stores. He is currently

Brenda Jane Johnstone the principal of Ross Co., a consultancy phone: 1.204.489.4215 for convenience, foodservice and fuels email: bjj@womenincarwash.com marketers. He is also a lifelong Green Bay Packers fan — Go Pack Go! He can be reached at tom.ross@rosscollc.co.