The warning came from Chalmers Community Board member Peter Cole, as it was confirmed yesterday Foodstuffs planned to withdraw its New World branding from the supermarket next month.
The business will be rebranded as a Four Square and sold to new operators.
Job losses are expected.
The details came in a letter from Foodstuffs South Island retail operations general manager Alan Malcolmson to the supermarket's 70 full and part-time staff, obtained by the Otago Daily Times yesterday.
In the letter, Mr Malcolmson said the supermarket was ''one of the smaller sites'' in the New World group, and faced increased competition as more people opted to shop at larger supermarkets.
The change was necessary because of ''concerns regarding the businesses [sic] ongoing viability'' and would ''better reflect the turnover and size'' of the supermarket.
''Regrettably, if we rebrand, there will be redundancies,'' the letter said.
Staff were shocked after being delivered the surprise news at an early morning meeting on Thursday.
Many feared the changes would drive more customers away, leading to the supermarket's eventual closure, the ODT understands.
Mr Cole agreed, saying when contacted he feared the change to a Four Square operation would eventually spell the end of the supermarket.
The supermarket acted as a hub in the Port Chalmers' main street, drawing people to the area, providing jobs for locals and being a focal point for community fundraising activities.
''It's devastating for Port Chalmers.''
The supermarket has been owned and operated by James and Cath Flanagan for the past three years. The pair are understood to be leaving for Rangiora next month.
Mr Flanagan would not comment when contacted, referring all questions to Mr Malcolmson, who would only say ''consultation with staff is under way with regards to rebranding the store to a Four Square''.
''During this time, we are unable to provide further comment.''
Staff have been given until March 27 to comment on the changes.
