The review is believed to include all the media requirements around Sainsbury’s main retail business and its banking business.
All agencies without client conflicts are expected to be invited to take part in the process, including WPP’s Maxus (whose global chief executive Lindsay Pattison used to be close to the account at PHD) and MediaCom, the UK’s biggest agency notable for its lack of a high street supermarket among its client roster.
A Sainsbury’s spokesperson said: "We have enjoyed a very successful partnership with PHD and our decision to re-pitch this business is in no way a reflection of their work. We have invited PHD to pitch for the business again and will also be inviting other agencies to participate.
"The successful agency will share our values as well as help us deliver great value in an increasingly competitive market."
A spokesperson added that the review will not be widened to include the advertising account handled by PHD's Omnicom sibling, Abbott Mead Vickers BBDO.
The review comes on the back of a tough year for the UK’s third-biggest supermarket, as it battles increased competition amid an ongoing volatile trading environment.
Sainsbury’s reported a pre-tax loss of £290m in the six months to 27 September 27, and 2.1 per cent fall in like-for-like sales. The bulk of the losses were attributed to £665m of charges, primarily related to a writedown on the value of its property portfolio.
Mike Coupe, Sainsbury's chief executive who succeeded Justin King in July, announced a strategic review of the entire business earlier this month, with a focus on cutting costs and improving quality of its own product lines.
The supermarket's Christmas ad (pictured), created by Abbott Mead Vickers BBDO and based around the football truce during the First World War, has been the subject of wide-ranging national debate this month.