Karen Bray, Safeway's marketing director, is talking to agencies about a campaign that would be Safeway's first since 1999, when the supermarket ditched Bates' "talking toddlers
campaign in favour of a move to price-led promotional activity.
Safeway is expected to include Bates in conversations about future advertising.
The search for a creative agency will not affect its promotional marketing account, which is handled by 141, Bates' below-the-line agency.
The supermarket pulled out of TV advertising following the arrival of Carlos Criado-Perez as Safeway's chief executive. As well as promotional activity, it also ran local press advertising and guerrilla marketing activity.
Last year, Safeway announced increased profits of 31 per cent to £320 million but recently it has seen its share of till revenues slip slightly to 10.5 per cent. It had built this share through an aggressive price-cutting campaign but other supermarkets have also used this tactic.
Two years ago Safeway also took the decision to scrap its ABC loyalty card, which had been the first to launch in the supermarket sector. Criado-Perez had said that customers were more interested in constantly low prices than in a long-term loyalty scheme with occasional benefits.
However, Safeway is now faced with the issue of increasing loyalty and building a strong brand to encourage customers to look beyond its promotional offers and increase their levels of spend at the stores.
Safeway engaged in further cost-cutting last August when it scrapped the online service Wines Direct to focus on its core business. It then abandoned its online shopping service, Connect, after a trial at eight stores.