Budgens Stores, the 180-strong grocery multiple, is reviewing its &£1m media account out of Mediacom TMB, after the agency won the &£10m Iceland media business in June.
The clash became more pronounced after Iceland announced two weeks ago that it was to offer free online shopping. Budgens is launching its own online home shopping service this summer.
Budgens is understood to be in discussions with a number of different media agencies.
Budgens’ pre-tax profits for the year to May 1999 grew by 20 per cent to &£12.6m. Like-for-like sales growth was up 2.7 per cent compared with 2.1 per cent, while group turnover was up 13.9 per cent at &£440.2m.
According to the company, profits rose as a result of an extensive refit programme. The grocery chain is also planning to open 18 new stores as part of a &£30m investment programme and develop its petrol forecourt operations.
Analysts believe that an Internet venture could help increase profits at Budgens because unlike the supermarkets, online shopping does not endanger its existing business.
Earlier this year, Budgens launched a hot food offering of take-away pasta dishes, which were tested at its central London store in Tottenham Court Road.