Kingfisher Asda move poses Safeway threat

A big question-mark hangs over the future of Safeway’s pounds 18 million account at Bates Dorland if the proposed merger of its Asda rival with the Kingfisher group, a major Dorlands client, goes ahead.

A big question-mark hangs over the future of Safeway’s pounds 18

million account at Bates Dorland if the proposed merger of its Asda

rival with the Kingfisher group, a major Dorlands client, goes

ahead.



Industry sources believe the pounds 17 billion deal makes the continued

co-existence of Safeway and Kingfisher within the same agency

impossible.



’One or the other will have to go,’ an insider said.



Speculation is mounting that Kingfisher, which already has more than

pounds 40 million worth of Woolworths, B&Q and Superdrug business at

Dorlands, will force the agency to part company with Safeway.



The deal could also throw the consolidated media account into the

melting pot with sources indicating that a pitch is likely next

year.



Carat, which handles Asda’s media, has no clients that would prevent it

pitching for the enlarged Kingfisher account. But Zenith, which has all

the Kingfisher business, also looks after Safeway.



Graham Hinton, Dorlands’ chairman, said this week that he had spoken to

senior executives of Safeway and Kingfisher and neither considered the

conflict issue a problem.



’We’re hugely sensitive to the issue and we’re not complacent,’ he

said.



’But both clients say they are comfortable with the current

arrangements. However, we don’t know what degree of separation we will

have to deliver to ensure the complete confidentiality of the

businesses.’



That may prove difficult in the light of the planned cross-fertilisation

between Asda and Woolworths. The merger is expected to lead to Asda’s

George clothing range being available in Woolworths city-centre stores,

while Asda’s non-food offering is bolstered with merchandise supplied

through Kingfisher.



Dorlands has long had to perform a balancing act between Safeway and

Woolworths, whose product offerings often overlap.



A Safeway spokesman said: ’We and Kingfisher have been clients of

Dorlands for a long time and there is no conflict of interest.’



It is possible that Dorlands could sacrifice Woolworths in order to

retain Safeway.



Kingfisher is unlikely to compensate the agency by giving it Asda, whose

chief executive, Allan Leighton, has a strong relationship with the

Publicis chairman, Rick Bendel.



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