Bates faces Asda merger threat to 20m Safeway

Bates Dorland’s hold on the 20m Safeway account may be in jeopardy following the proposed merger of rival supermarket Asda with Kingfisher, one of the agency’s biggest clients.

The merger would create the largest retail group in the UK, combining Asda’s 7.6bn supermarket business with Kingfisher’s 7.4bn sales, through its chains B&Q, Superdrug, Comet and Woolworths.

Bates holds the 25m B&Q account, plus the 5m Superdrug and 24m Woolworths business. One source says Safeway may be unhappy to work with an agency that handles a retail group which includes a rival supermarket.

Asda uses Publicis for its 28m account. It is believed that the close relationship between the supermarket’s chief executive Allan Leighton and Publicis boss Ric Bendel precludes a split between the two.

A Safeway spokeswoman says: “We have a good working relationship with Bates Dorland and we don’t see the current merger discussions between Asda and Kingfisher affecting this position.”

Insiders at Bates say that much of Kingfisher’s current business could potentially conflict with product areas covered by Safeway, but add that the accounts are handled completely separately and both sit happily within the agency.

However, the merger could lead to Asda’s clothing brand, George, being sold in Woolworths stores and Superdrug own-label products being sold in Asda, provoking conflict issues.

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