A small hillside township in the Sunshine Coast hinterland could soon be embroiled in a legal spat over a developer's hope to build its first full-sized supermarket. 

The population in the historic town of Palmwoods has grown with multiple housing developments in the region, but it remains tied to its reputation as a quiet, rural area.

The proposed Coles supermarket and bottle shop is facing rejection by the Sunshine Coast Council this week, though the developer is already vowing to appeal, foreshadowing that a court fight could follow any refusal.

The matter is due to be considered at a council meeting on Thursday.

Palmwoods' main access to groceries is at a small supermarket near the railway station, with most heading out-of-town when they need to do a larger shop.

Developer NeuBau wants to build its supermarket complex at the edge of town on a long-vacant block along the main road.

Tim Reed from NeuBau said the project had "unwavering support" from the Palmwoods community.

Word from the bookshop

The town is torn over the promise of a large supermarket around the corner, with some fearing an increase in congestion and development.

Others are frustrated that their town is already growing busier with housing estates popping up in the area, yet they have no easy access to groceries without going to Nambour — the largest nearby town — about 20 minutes away.

Kay Nixon is a quiet force in Palmwoods as owner of the tucked-away Little Book Nook book store.

She also helps run the Palmwoods community garden, provides pastoral care for those needing spiritual guidance and is a long-serving member of the town's business association.

She said at first she worried for the site, where some residents would spot the odd platypus along the trickling streams.

Now her concern lies with having a big company arrive in a small place.

"So Coles and Woolworths I just feel are dominating business across the country and their practices aren't always the way that I would like to see things done.

"We've got a bakery here and other small businesses that it's hard enough — I know what it's like trying to survive as a small business and I feel for them.

'Going to become unliveable'

Paul Stevenson rides around town on his bicycle, and pops in and out of the stores and co-operatives that he believes makes the town so special.

He said a large-scale supermarket risked harming the small-town energy and community that attracted people in the first place.

Mr Stevenson said he feared for those who already offer food and services in Palmwoods.

"If you stick hundreds of extra carparks and supermarkets in the middle of town, it's just going to become unliveable."

Council says plan could hurt town character

In the council report being discussed at this week's meeting, officers warned there was already a smaller shopping precinct approved for the heart of the town.

However, that project is yet to start construction or earthworks and the site is lined with empty storefronts.

"In contrast, the bulk, scale and design of the [NeuBau] proposal is not consistent with the desired rural town character for Palmwoods and does not contribute positively to the traditional streetscape," officers wrote in their report.

Council staff found the NeuBau project risked creating "a fragmented, disconnected and unwalkable centre, to the detriment of its character, identity, functionality and viability".

They said it was also in "clear conflict" with the town's planning scheme and proposed for an unsuitable residential area.

The council report also noted there was nowhere within the main Palmwoods business area that could handle a supermarket of this design and size.

Developer vows to push ahead

In a statement, Tim Reed from NeuBau said the findings were "obviously not what we had hoped for", but came as no surprise.

He said the planning scheme also called for a larger supermarket for the town, which the council now seemed set to reject.

"The scheme earmarks Palmwoods for a full-line supermarket, and a full-line supermarket is defined in the scheme as being 2500 square metres or greater," Mr Reed said.

The proposed Coles would run to about 3900 square metres, not including the parking area or nearby bottle shop.

If built, it would include 196 car spaces, 22 bicycle spaces and service parking for up to six trucks.

Mr Reed said he would seek to appeal any rejection of the plan by the council, warning he would consider court action "if need be".

"[Palmwoods residents] need a full-line supermarket and deserve to have one delivered, even if it's not ours," he said.

If the supermarket proposal is refused, Mr Reed also has the option to return to an earlier council approval to build 55 units on the site.

Desire for convenient shopping

The plan for a major supermarket does have significant community support.

In the same council report that raised concerns about the project, it also noted that staff received 224 submissions from the public backing the plan and just 10 against it.

"It is noted that the large majority of supporting submissions [over 95 per cent] were in a pro-forma template," the report found.

The developer's website provides a link to help people send letters of support to the council's chief executive officer.

Linda Doolan is among those who said she hoped the proposal was approved at this week's council meeting.

"We've lived at Palmwoods for the last 19 years and I personally would like to have a supermarket because at Palmwoods we've only got the SPAR," she said.

"We're in our 70s now and it would be really good to not have to go into Nambour.