The centre of Barnoldswick could disappear if planning permission is given for a second superstore in the town.
The claim was made during a public hearing on Tuesday into the non-determination of an application to build a Tesco superstore on the L&P Springs site, off Wellhouse Road.
But planning inspector Philip Asquith was told the scheme could jeopardise existing businesses in the town.
In August, planners approved a separate application from Barnoldswick textile firm Albert Hartley to redevelop its site, which would include a new supermarket.
Savills Commercial Limited, the firm in charge of planning for the Tesco application, said the Albert Hartley site was less preferable in terms of the market and no operator had come forward.
Jeremy Hinds, of Savills, said: “The site would be behind another store, further away from the town centre and behind a mill building.
“It’s a severely compromised site, and it’s no surprise there have been no discussions with an operator.”
But Albert Hartley representative Mike Ralph said: “We’ve had approaches from three of the big four supermarkets, who have Barnoldswick as a target town to build a new store. And the fourth one would like to consider developing a store in the town. So we’re confident that one of these operators will take the store.”
And his colleague, Adam Higgins, of Capital and Centric, which is in charge of developing the Albert Hartley plan, named the interested operators as Morrisons, Asda and Sainburys and said that they had also been approached by Tesco.
But he said no discussions with these operators had taken place since the plan was approved six weeks ago because of the “looming” public hearing into non-determination of the Tesco application.
Pendle Council’s planners argued that the appeal should be dismissed because they believed that approving two supermarket applications could put the town centre in an exposed position.
Pendle Council representative Roland Bolton said: “We take the position that two new stores would introduce so much floor space into the area that one could not find sufficient expenditure in the area, resulting in lower levels of trading.”
He also explained that the two supermarkets could seriously hinder trading for the existing Co-op, which would have a knock-on effect on other town centre shops.
“The Co-op clearly has quite an important role in bringing people to the town,” said Mr Bolton.
“Two-thirds of visitors to the town centre are going to the Co-op and 90 per cent of those are doing linked trips.”
Mr Bolton added that approving a second supermarket application would go well beyond impacting the Co-op.
“How much would a trade diversion from the Co-op impact the footfall around the town? That is what, clearly, (West Craven Area Committee) members are very concerned about.”
But Mr Hinds said there was abundant evidence that there was a market in Barnoldswick for a superstore, like Tesco, to accommodate the needs of residents who would like to do their main shopping in town.
Mr Hinds said: “The principal use of the Co-op is as a top-up shopping trip and there is no reason to see why that pattern would be materially changed.
“There would be no harm in granting consent to the appeal.”
Stephen Hughes, a regional planning manager for the Co-operative Group, said: “Even one of these schemes will have an impact on our store and we’d have to consider that long-term impact. It could also create a wider problem for the town centre and the other traders there.”
Alan Croston, a representative of Janet Dixon Town Planning, said: “If two permissions were granted the risk is high that they both would be built and the town centre could, effectively, disappear as a result.”