Tuesday, December 23, 2008

A Retailer's Christmas Story: Giant Wal-Mart Pulls Trademark Application for 'Marketside' Name in Canada After Owen Sound, Canada Independent Objects

Who says global mega-retailer Wal-Mart Stores, Inc. doesn't look out for the little guy?

Certainly not Paul Thomas and Karin van der Heyden Thomas, who operate a food and grocery store and catering operation called "Marketside Food Shop and Cafe" in Owen Sound, Canada, and have been doing so for 20 years.

The independent food store owners heard last January (2007) that Wal-Mart had submitted a trademark application in Canada under the name Marketside, its new small-format combination fresh food and grocery markets, the first four of which opened in October of this year in the Phoenix, Arizona Metropolitan region in the U.S.

Like Wal-Mart's Marketside stores, the Canadian couple's "Marketside Food Shop and Cafe" offers in-store prepared foods, including hearth-baked bread, and other fresh food and grocery items.

The two Marketside's -- the independent Owen Sound, Canada store, and Wal-Mart's Marketside division -- even have similar Web site URL's. This is the Canadian independent Marketside's Web site URL: http://www.marketside.ca.the/ Wal-Mart Stores, Inc.'s Marketside site is nearly identical and is at the URL here: http://www.marketside.com/.

Of course the similarities between the two stop about there -- from there it's all basically David vs. Goliath.

But there was no battle.

Earlier this year the Owen Sound independent food retailers contacted Toronto-based intellectual property lawyer Megan Langley Grainger after they heard about Wal-Mart's registering the Marketside trademark for Canada. The lawyer warned the couple that it could be costly to fight Wal-Mart, particularly if doing so meant going into litigation. However she offered to draft an initial letter about the issue to Wal-Mart's corporate counsel for a reasonable legal fee and then go from there.

In just a month's worth of letter exchanges between lawyer Megan Langley Grainger and Wal-Mart corporate attorneys, the issue was settled -- Wal-Mart withdrew its trademark application in Canada for the Marketside name and wished the owners of the Owen Sound "Marketside Food Shop and Cafe" well in their continued, and for now exclusive, use of the Marketside name.

Thomas and van der Heyden Thomas just received copies of a Dec. 5, 2008 letter from Wal-Mart lawyer Gervas W. Wall to Canadian trademark officials withdrawing the company's Marketside application.

There will be no Wal-Mart-owned and operated "Marketside" banner stores in Canada -- at least under that name. It doesn't mean Wal-Mart isn't still looking into opening some of its small-format, combination fresh food and grocery stores in Canada. It just would do so minus using the Marketside name.

The independent food retailing couple says they were prepared to consider a financial settlement that would have allowed Wal-Mart to take over the name because they didn't have the resources to fight a long court battle if it came to that. But it didn't.

In addition to operated the food store and catering business, the couple produces and markets a line of flat bread products and spreads under the Marketside brand. The products are sold in their store and marketed to other Canadian retailers. Perhaps they should pitch Wal-Mart to sell the branded goods in its four Marketside stores (and soon to be fifth) in Arizona.

Meanwhile, a Wal-Mart Stores, Inc. source tells Fresh & Easy Buzz that the retailer has no near-term plans to open a different named version of its Marketside stores in Canada, where Wal-Mart is becoming a major player in food and grocery retailing with its numerous Supercenters. The source also said doing so hasn't been ruled out either.

As we've reported, Wal-Mart plans to open 10 Marketside stores, five in Arizona and five more, we think four (we've already reported on two going in the San Diego region) in Southern California and one in Reno, Nevada,

We know Wal-Mart has watched the development of Canada's Sobeys chain with its small-format "Urban Fresh" markets, which are similar to the Marketside format. Actually, since Sobeys' "Urban Fresh" existed long before Wal-Mart Marketside, it's more fair to say the Marketside stores are similar to Sobeys' "Urban Fresh."

Sobey's uses its small-format "Urban Fresh" as part of its multi-format and multi-banner food and grocery retailing strategy in Canada, unlike what Tesco is doing in the U.S. by using small-format Fresh & Easy as a single-play/single-format strategy. Sobeys operates 1,300 stores of varied formats and sizes in Canada under numerous different banners.

As we've written about previously, that's Wal-Mart's strategy with Marketside -- it is just one part of a multi-format food and grocery retailing strategy that includes Supercenters, Wal-Mart Neighborhood Market supermarkets, Sam's Club and now Marketside. Wal-Mart also is working on at least two new food retailing formats, as we've reported previously -- one is a medium-sized (about 25,000 -to- 30,000 square foot) Hispanic 2.0 format (a hybrid Hispanic and Anglo market) and the other is a scaled down version of a Supercenter, sort of a discount store with a food and grocery focus.

Wal-Mart's agreeing so readily to pulling its trademark application for Marketside could be taken in a number of ways. For example, (1) it doesn't want to get the negative publicity that would surround a court battle with an independent food store operator? (2) Marketside isn't that big a brand name to the retailer. Therefore no "big deal" in dropping the trademark application. (3) Its got an even hotter name for its Canadian version of Marketside in the works?

Our answer: it's a bit of all of the above. Most significant though is Wal-Mart did not want a legal fight (and all the bad publicity that would come from it) over the Marketside name in Canada, where it is a major player with its Supercenters and is building and applying for permits to build even more of the mega-stores. After all, the retailer doesn't even know if it will build any small-format Marketside-like stores in Canada. Therefore it essentially decided the cost of trying to push the trademark through was far greater than the benefit.

And, if Wal-Mart's Marketside ends up being a big hit in the U.S., and the retailer wants to start opening stores under the same banner in Canada, it can always approach the owners of the Owen Sound "Marketside Food Store and Cafe" with a nice, healthy financial offer to by the rights to the name from them -- and perhaps even toss in a global distribution deal for the couples Marketside brand flatbreads and spreads.

Wal-Mart's acting like the "Gentle Goliath" to the Canadian couple's determined but reasonable David almost qualifies as a Christmas story these two days before the traditional religious holiday, which has morphed in modern times into a retail holiday as well, and probably even more so.

This decision, along with the settling of the 63 class action lawsuits we reported on earlier today, and the recent donations of millions of dollars in cash and hundreds of thousands of pounds of food to groups feeding the hungry, makes us wonder if CEO Lee Scott and company at Wal-Mart headquarters in Bentonville, Arkansas, aren't celebrating a more charitable, traditional Christmas this year -- a year in which retail sales are among the worse in recent history -- but also a year in which Wal-Mart is doing better than any other retailer in the U.S. is dping during this deep economic recession.

In the spirit of the behaviors and return to tradition, we end with the words (and music) to what is widely considered to be the most traditional and popular Christmas carol -- Silent Night!:

Silent Night!

The origin of the Christmas carol we know as Silent Night was a poem that was written in 1816 by an Austrian priest named Joseph Mohr. On Christmas Eve in 1818 in the small alpine village called Oberndorf it is reputed that the organ at St. Nicholas Church had broken. Joseph Mohr gave the poem of Silent Night (Stille Nacht) to his friend Franz Xavier Gruber and the melody for Silent Night was composed with this in mind. The music to Silent Night was therefore intended for a guitar and the simple score was finished in time for Midnight Mass. Silent Night is the most famous Christmas carol of all time. It's also considered the most traditional of Christmas Carols, and is even enjoyed among non-Christians.

Silent night, holy night
All is calm, all is bright
Round yon Virgin Mother and Child
Holy Infant so tender and mild
Sleep in heavenly peace
Sleep in heavenly peace

Silent night, holy night!
Shepherds quake at the sight
Glories stream from heaven afar
Heavenly hosts sing Alleluia!
Christ, the Saviour is born
Christ, the Saviour is born

Silent night, holy night
Son of God, love's pure light
Radiant beams from Thy holy face
With the dawn of redeeming grace
Jesus, Lord, at Thy birth
Jesus, Lord, at Thy birth "

Click here to listen to Silent Night!

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