The Roslyn Book and Toy Centre, in Roslyn Village, will be closed in mid-May by owners Barry and Lillian Brown.
The couple bought it in February 2001, from founders Lawrence and Noeline Clarke, who operated it for 35 years before retiring.
Mr Brown said turnover had dropped about 30% in the past five or six years. The shop specialised in modelling, as well as doll house accessories and other toy lines, but buyers of such goods were increasingly using the internet.
The store was one of Dunedin's first Lotto outlets, as well as a postal agent, and included a dry-cleaning service.
As well as books, models and toys it sold stationery, magazines, games and cards.
Chain retailers were also starting to stock specialist items, making it difficult for small privately-owned stores to compete, Mr Brown said.
Increasing compliance costs, fees and rates added to the problem.
On hearing about the store's closure, a supplier told Mr Brown, ''it makes you about number 40 this year'', referring to small businesses closing nationwide.
Mr and Mrs Brown worked outside the store and employed three people, for the equivalent of about 1.8 fulltime positions.
They bought the shop in the hope it would continue trading for years, and apart from a little ''tweaking'' had maintained its initial format.
Loyal customers were ''gutted'', and one woman wanted to petition for its continued operation, a staff member said.
Mr Brown said many of the store's regular customers were elderly Roslyn residents and those who had difficulty travelling out of the suburb.
''They will find it difficult to get the same quality of service, social interaction and shopping experience they've become accustomed to, and it will be expensive for them to get transport into town.''
Suppliers and other business associates might also feel the effect of the store's closure, he said.
Mr and Mrs Clarke were also upset their former shop would close, as it had been a huge part of their lives.
