CLOSE-UP: LIVE ISSUE/WOOLWORTHS - Will Bates fit into Woolworths' plan for an upmarket future?

Pressure on the store has sparked a pounds 25m creative review, John Tylee reports.

Even though it had been mooted for months, last week's announcement by Woolworths that it is to review its pounds 25 million creative account still took a few people by surprise.

After all, only three weeks ago, the retailer declared itself on track for a sharp profits recovery after a better-than-expected performance before Christmas.

At Bates UK, the Woolworths incumbent for 17 years, senior managers also believed the worst was behind them. Recent rocky relations with their client, not helped by the disparaging remarks by the actor Paul Kaye about his appearances in the brand's TV ads, seemed to have been overcome.

Moreover, research feedback for the upcoming campaign had convinced the agency that its tenure was secure.

'We knew Woolworths had been having conversations but we thought the problem had gone away,' a Bates executive says. 'The review was a real shock.'

Actually, the momentum for a pitch was well advanced, driven by a new regime at Woolworths with an agenda for change. As Toby Hoare, the Bates chairman, puts it: 'Woolworths has to get this out of its system.'