18.1 Mission and Purpose of .GROCERY
Safeway Inc. (“Safeway”) is one of the largest food and drug retailers in North America. As of December 31, 2011, the company operated 1,678 stores in the United States and in western Canada. In support of its stores, Safeway has an extensive network of distribution, manufacturing, and food processing facilities. Safeway owns and operates GroceryWorks.com, LLC, an Internet grocer doing business under the names Safeway.com and Vons.com. Through its subsidiary, Blackhawk Network Holdings, Inc., Safeway provides third-party gift cards, prepaid cards, telecom cards, and sports and entertainment cards to retailers in North America, Europe, Australia, and Japan. Safeway also holds a 49% interest in Casa Ley, S.A. de C.V., a food and general merchandise retailer with 185 stores in western Mexico. Safeway content is accessible in multiple TLDs, including the .BIZ, .COM, .INFO, .NET, and .ORG gTLDs, and the .CA, .CO.UK, and .US ccTLDs.
Safeway will analyze and evaluate other gTLD applications as well as general market adoption to determine short- and long-term potential best-in-class use case options to more effectively service and enhance its online strategy. Safewayʹs current operating strategy is to provide outstanding value to consumers by offering a unique shopping experience in its stores and online, with a wide selection of high quality products at low, everyday prices and attractive Club Card specials. Safeway is also taking a brand management approach to building high quality proprietary Consumer brands with significant innovation and new product development work.
The intended future mission and purpose of the .GROCERY gTLD is to serve as a trusted, hierarchical, and intuitive namespace provided by Safeway and its qualified subsidiaries and affiliates for consumers. Safeway will be the entity to bring the .GROCERY gTLD to market and is also applying for .SAFEWAY, .VONS, and .JUSTFORU (Safeway Family of gTLDs).
The .GROCERY gTLD is planned as a restricted-registrant gTLD, with the goals of protecting Safewayʹs online presence and identity, expanding its marketing and promotional efforts, providing a secure channel for products and information online, and offering a platform on which to consolidate many of the intellectual property activities of Safeway.
Safeway intends to initially limit registration and use of domain names within the .GROCERY gTLD to Safeway and its qualified subsidiaries and affiliates. This will allow Safeway to establish its operations and achieve full sustainability. This limited distribution, coupled with the other requirements set forth in Specification 9 of the template Registry Agreement, is intended to exempt Safeway from its annual Code of Conduct Compliance requirements. Safeway may also evaluate whether opportunities exist to carry out a new business strategy for the .GROCERY gTLD that would both ensure continued sustainable operation of the registry, and expand it through fee-based registrations to parties other than Safeway and its qualified subsidiaries and affiliates.
Safeway currently plans a four-stage rollout for the .GROCERY gTLD. The dates of these stages are subject to change depending upon a range of business, strategic, and industry factors.
1) Stage 1
During the initial stage of implementation of the .GROCERY gTLD, Safeway will register a limited number of second-level domain names and, potentially, use .GROCERY domain names to redirect to Safeway content in the .COM TLD.
This will provide Safewayʹs IT and security personnel with time to run a number of tests to ensure seamless and secure access using .GROCERY domain names, interoperability with various software and Web-based applications, and unbroken and secure use of all domain names. This will also allow the appropriate Safeway staff to coordinate with the internal and external staff responsible for the delegation and setup phases of the .GROCERY gTLD to ensure proper transition from delegation to full operation.
2) Stage 2
Once all testing has been successfully completed, Safeway will begin allocating domain names in .GROCERY for more widespread internal use. Safeway will also begin evaluating strategies to potentially migrate traffic away from its current network of second-level domain names, which are registered in a variety of TLDs, to the new Safeway Family of gTLDs.
During Stage 2, Safeway will evaluate expanding the operations of the gTLD to other registrants, such as licensees and strategic partners. Should this lead to a decision to extend registration rights to other parties, the expansion would take place during Stage Three. However, any expansion would be conditional upon a review of Specification 9 (Registry Code of Conduct), as set forth in the template Registry Agreement, to ensure compliance with Safewayʹs business model.
3) Stage 3
Depending upon the analysis of the evaluations undertaken in Stage 2, Safeway may begin to implement the permanent migration of Internet traffic away from the TLDs in which Safewayʹs domain names are currently registered, to the new Safeway Family of gTLDs. Safeway may also implement its decision to extend registration rights to a wider class of registrants, such as licensees and strategic partners, depending upon compliance with Specification 9, as noted above.
After consideration of the following factors: analysis of Safewayʹs existing domain name portfolio; internal analysis of marketing initiatives; and the fact that Safeway will have full control over the number of registrations in the .GROCERY gTLD namespace, Safeway is confident that the number of domain name registrations will be less than 10,000 in the first five years of operation.
4) Stage 4
Based on its experience with any expansion implemented in Stage 3, Safeway will assess whether its business plan and expansion strategy should be augmented by extending registration rights to a wider class of registrants, such as Safeway customers. Safeway anticipates that changes to the domain name industry, particularly the impact of new gTLDs, will take at least five years to be realized and assessed. Any decision to expand the .GROCERY gTLD beyond use by Safeway and its qualified subsidiaries and affiliates will take into account this experience as well as the technical analysis of potential expansion.
If Safeway were to approve an expanded use of the .GROCERY namespace after the fifth year, Safeway would implement a throttle mechanism to ensure that this expansion would be controlled and responsible.
Specifically, under the throttle mechanism, Safeway would cease registration of domain names if and when Safeway reaches 90 percent of the annual 50,000-domain name transaction limit currently provided for in the template Registry Agreement. Safeway believes that it is prudent to incorporate this “time-out” into the business plan in order to reevaluate potential future growth and the necessary resources to ensure that this growth does not negatively impact the secure and stable operation of the .GROCERY namespace when approaching the 50,000-domain name transaction threshold. This proposed “time-out” mechanism is described in greater detail in the responses to the financial questions (Question 45-50).
The potential use of the .GROCERY gTLD by Safeway will also be driven by Safewayʹs future business strategies as identified in its annual report and investor filings, see http:⁄⁄www.safeway.com⁄ShopStores⁄Investors.page#iframetop.
Utilizing current projections based upon Safewayʹs existing businesses, future business plans, current domain name portfolio, and other strategic factors, Safeway estimates that second-level domain name registrations will be in line with the projections set forth in the financial template provided in response to Question 46 of this application. |