Pete Harrison.

Pete Harrison. Photo: Supplied

Palerang Council is working with a developer on plans for a medium-sized supermarket in Bungendore, sending shivers up the spines of some small businesses worried about the impact of major chains on the town.

But mayor Pete Harrison has ruled out the corporates, saying they cannot connect with a rural community.

Butcher Paul Darmody said if Woolworths opened, family-owned businesses such as his would downsize or close. ''Everything that comes through my shop in beef and lamb is grown and fattened on my own farm. I support the local stock markets and support a lot of farmers in the Queanbeyan-Canberra district.

''Woolies don't do that, they don't buy locally. A lot of people get hurt when a little fella goes out of business.''

He said 21 butcher shops operated in Queanbeyan when he did his apprenticeship decades ago. Many had closed since Coles and Woolworths opened at Riverside Plaza. ''I think there's only about three left.''

Mr Harrison said Woolworths was previously turned away before his time on council, and for the same reason a smaller, more appropriate supermarket was now under consideration.

''There's a general feeling it needs to be twice the size of the existing supermarket, 1500 to 2000 square metres is the sort of floor area to carry the range and level of stock to service a population of 3000 or 4000 people, somewhat less than what you have for Woolies and Coles.''

Bungendore Chamber of Commerce president John Dennehy said members had various views on the impact of a full-line supermarket.

He said he was more concerned about new business barriers the council was creating, such as steep contributions for parking.

''Bungendore does need services. We have been fighting as a chamber for a while to say we need services in the town.''

He said a lack of services forced people to travel elsewhere to shop.