Dunedin Opera Company committee chairman Murray Davidson said it was a ''gut-wrenching'' decision to close Mayfair Costume Hire in Cameron St and end its 50-year history.
The committee decided to close the shop because it struggled to compete with online businesses selling cheap costumes.
It would consider selling the business as a going concern, but if nobody signalled an interest, the shop would close on December 19.
The committee intended to start selling the costumes from February 20 next year.
The first option to buy would be offered to dramatic societies before the sale opened to the public.
The shop's fulltime manager, Karen Weatherall, would be made redundant after working there for 14 years.
Many Dunedin residents would be ''gutted'' by the shop closure, as she was, Mrs Weatherall said.
''I put my heart and soul into this place.''
Her mother, part-time worker Vera Weatherall, was the other redundancy.
The mother-daughter team created hundreds of costumes among the several thousands on offer.
Customers trying on costumes and being in fits of laughter was commonplace, Karen Weatherall said.
''We are both really sad. We've had a lot of fun here; it's a happy place. It's going to be a big loss.''
Committee secretary Peter Russell said the shop had made a financial loss the past two years, despite hiring out about 50,000 costumes annually for the past six years.
In hindsight, the committee should have moved for a website to be created about four years ago to allow online hiring but decided against it due to a lack of funds.
If the committee had allowed the shop to continue, it would have spelled the end of the committee.
''We would wipe ourselves out.''
