For about a decade, Canadian retail mall king Isaac Benitah tangled with U.S. discounter Target Corp. over who owned the rights to the coveted Target name north of the border.
He had snapped up the name 11 years ago when he acquired a bankrupt domestic merchant amid signs that the U.S. discount giant would eventually land here.
Now, he is turning that purchase – and claims to the exclusive rights to the Target name here – into a victory. On Wednesday, he agreed to Target Corp.'s settlement to phase out his own Target stores and avoid a messy court battle in the process. But he'll need to find another way to protect his status as one of the few fashion retailing moguls in the country as Target prepares to open its stores here in 2013, providing him with brutal new competition.
The settlement, which industry experts estimate to be in the millions, is seen as a win for Mr. Benitah, whose Canadian retail empire includes an array of chains, such as women's wear specialist Fairweather and men's clothing retailer International Clothiers. It's also a cautionary tale for other retailers in Canada in today's rapidly changing merchandising landscape: With mall space being snapped up by Target and other bigger foreign players, domestic players have to keep reinventing their retail concepts to stay in the game.
"Isaac Benitah has done a lot better getting a big cheque from Target than he would ever do running 10 or 20 or 30 stores under the Target name," retail consultant Antony Karabus said. "Now he needs to be able to make his concepts significantly better – that's the cautionary tale … He's got to get a lot sharper."
He won't be getting sharper with the Target name much longer. The settlement calls for him to stop using it by Jan. 31, 2013, just a few months before the U.S. discounter will launch its own stores here.
Already Mr. Benitah had succeeded in confusing customers with his 15 or so Target Apparel stores, most of which he had quickly rolled out in the past year. They feature a logo that is similar to the U.S. chain's bull's eye trademark. The settlement "will eliminate any potential confusion among Canadian consumers," the U.S. company said in a brief statement.
Mr. Benitah is a master at juggling banners, expanding his stronger chains and ditching underperformers. Last year, he added a new banner called Les Aile Xpress, which is a downsized version of his Les Ailes de la Mode outlets. He has converted his weaker Randy River men's stores into his newer Stockhomme shops.
But his most high-profile shift came in the past year or so, after Target said it planned to expand into Canada. Mr. Benitah started to quickly turn a growing number of his stores, including Labels, into Target Apparel shops, emulating U.S. Target outlets.
Bruce Stratton, a lawyer with the law firm Dimock Stratton, which specializes in intellectual property matters, said Mr. Benitah put himself in a strong position by registering the Target trademark in Canada years ago. "Doing your homework in terms of protecting your brand with the legal armour of a trademark registration certainly helped in this case."
Mr. Benitah acquired the Target Apparel brand in 2001 from the failed retailer Dylex Ltd, which had owned Fairweather. About six months later, Target filed a challenge with the federal trademark office, which agreed with the U.S. company, but that decision was overturned by the Federal Court of Canada. The appeal court upheld the ruling in 2007. In the meantime, Mr. Benitah opened his first Target Apparel store in Toronto in 2005 and, by late 2010, intended to open more, according to court documents.
Last summer, Target lost another legal challenge in its fight to stop Mr. Benitah from running stores under the Target banner. The battle was to go to trial at the end of this year, when Mr. Benitah was set to seek his own injunction to ban Target from selling clothing in Canada, arguing it infringes his trademark rights.