ALDI has emerged as the third high street supermarket chain vying to open a store in the south of the borough.
The German budget supermarket group this week confirmed it wants to develop the car park on the former Red Lion pub site in Brighton Road.
The news comes after the Advertiser previously reported Sainsbury's aim to open a store at the existing Blockbuster Video site, in Purley High Street, and Waitrose's talks with Croydon Council to build a store in Lion Green Road, Coulsdon.
The Aldi proposal has already divided opinion between those who have raised fears it could have an impact on local traders and others who say it would boost the town's appeal.
Coulsdon West councillor Ian Parker said: "My main concern would be the impact on the local businesses, that it is in keeping with the rest of Coulsdon and how it ties in with the Masterplan and the Cane Hill development.
"Having supermarkets at both ends of the town is perhaps not such a bad thing but this goes beyond that, so we would have concerns about that and need to look at it.
"In its current state, the site is clearly not acceptable. We have had various complaints from people who park there and it doesn't look very attractive.
"Aldi owns it and have a right to say what they can develop there. My main concern is local shopkeepers with a Waitrose already close by."
An Aldi spokesman confirmed it is in "pre-application negotiations" with Croydon Council, with the supermarket chain expected to submit a planning application in the new year.
Charles King, chairman of East Coulsdon Residents' Association, said his group recently conducted a survey that found 55 per cent of people do not shop in Coulsdon and that a big-name store is needed to increase the town's appeal and give families more choice.
Mr King said: "It's not bad news. Coulsdon badly needs a larger supermarket. There's a huge leakage of retail out of Coulsdon.
"To bring the footfall in, you need a large supermarket. People are forced to travel out of Coulsdon to find somewhere that has the full range of goods for their family and this is a key spot in the town centre."
An Aldi spokesman said this week: "We are currently in pre-application negotiations with Croydon Council regarding the site of the former Red Lion Public House.
"We are looking to open a new store on this strategic site to offer brand-like quality at everyday low prices."
The Advertiser asked how big the store is likely to be and if any on-site parking would be created, but Aldi did not respond before we went to press.
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