Multinational supermarket chain Aldi has proposed to build a new shop next to the Fyshwick Fresh Food Markets.
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An early community and stakeholder consultation is under way for an Aldi to be built at 11 Nyrang Street.
It is understood Aldi would lease the land from the owners. Freight company, Tony Innaimo Transport currently operates from the site.
According to the consultation, prepared by consultancy firm Communication Link, the supermarket intended to be opened by early 2024.
"The establishment of a supermarket has the potential to transform the site around the area into a food shopping precinct - complementing not competing with the Fyshwick Fresh Food Markets," the consultation said.
"A new supermarket in this location will provide immediate benefit through increased retail choice for today's inner south community."
But vendors at the Fyshwick Fresh Food Markets are not happy about the proposal.
Wiffens manager Ruth Roxburgh said every stallholder at the markets was opposed to the development, as were the owners of the markets.
Ms Roxburgh said she feared the supermarket would take away business from the markets and that many of the stallholders would be affected should this happen.
"There are a number of concerns, a key one we are a fresh food market, we're locally owned," she said
"It's not easy to be an independent, non-chain business and if they take away some of the sales of some of the businesses it will have an impact.
"Just taking away some of our trade, we are only open four days week and Aldi taking some of our customers will affect all of us."
A flyer has been distributed by the market, which claimed an Aldi would "threaten the long-term viability of many stallholders at the markets".
"There are already five major supermarket chains within a five-kilometre radius. We don't need another one right next to one of the last remaining hubs in Canberra of independent food retailers," the flyer said.
In a statement, an Aldi spokesman told The Canberra Times the proposed store was still in the early stages of planning.
"We have not submitted plans for the proposed store, however, we have commenced the consultation process," the spokesman said.
"We have been consulting with relevant parties during the planning process, including local businesses in the area, who are aware of our intentions for an Aldi store."