THE number of food and drug retailers with significant financial problems in Bournemouth has rocketed, new figures show.

The town has seen a 125 per cent increase in ‘significant financial distress’ in the sector year-on-year, according to business recovery specialist Begbies Traynor – up from eight businesses to 18.

Its Red Flag Alert research for the third quarter of this year shows the food industry has experienced the sharpest rise in significant distress of all sectors monitored.

Begbies Traynor says the price war between the big supermarkets will do little to entice shoppers back from the value German food retailers, including Aldi, which was due to open an expanded store in Holdenhurst Road, Bournemouth, today.

The broader picture showed the number of businesses in Bournemouth experiencing critical financial problems fell 67 per cent between the second and third quarters of 2014.

Significant distress levels were up seven per cent quarterly (845 to 906) and 24 per cent year-on-year.

Across the south west, manufacturers have struggled, while telecoms and IT and support services improved.

Julie Palmer, partner and retail analyst at Begbies Traynor in the South West, said of the food market: “With Tesco in disarray following revelations of its £250m profits overstatement, and dampened sales expectations from Morrisons and Sainsbury’s, all have been forced to cut prices in a bid to encourage shoppers back through their doors and recapture market share.

“But despite fresh produce deflation of around four per cent, this is not having the desired effect as consumer tastes have changed.

"Spoilt for choice within the traditional supermarket model and against a backdrop of falling living standards and stagnating real wage inflation, UK consumers are more aware than ever of the low prices available at Aldi and Lidl.

“The German discounters’ focus on simpler product ranges and successful own-label products means that, regardless of the ongoing price war, they can continue to lead on price while perfectly matching what shoppers now demand from their weekly shop.”