B&Q has warned it will have to close its store in Old Kent Road under plans by the owners of the Cantium Retail Park to subdivide its premises into four shops.
Aviva Investors has submitted a planning application to Southwark Council for permission to subdivide the B&Q unit into four shops, including a small convenience supermarket.
The proposals include the construction of a new mezzanine level inside the existing warehouse buildings.
Under the terms of the original planning permission for the Cantium Retail Park granted in 1991, food retailers are not permitted to trade there.
B&Q's planning consultants have warned that closure of the store would leave "a huge gap in DIY provision in Southwark and across the centre of London".
They added: "The closure of the B&Q Peckham store would result in an overwhelming loss in consumer choice for residents of Southwark and should be resisted.
"Given low levels of car ownership in the local area, it will be particularly difficult for residents of Southwark to access alternative DIY shopping provision."
The letter continues: "B&Q currently operate successfully from the subject application site and it is their wish to continue to do so.
"The Southwark store forms a crucial role for the company by serving a huge part of inner London and providing quality, affordable DIY goods for Southwark's residents.
"The application proposals would effectively force the closure of the B&Q store with no suitable alternative sites for its relocation given the high land values and poor availability of sites..."
B&Q says it currently employs 101 people at the store.
• See planning application 15/AP/4236
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