Traders in Belper, Derbyshire, are embroiled in a bitter planning row over a new Costa outlet in the town, despite winning a Great British High Streets competition partly sponsored by the coffee chain.

As part of their prize, they will receive an ambassadorial advice service from Costa, alongside other sponsors such as Boots and M&S, aimed at teaching them how to adapt to trends such as online shopping and the shift to an “entertainment-led high street.”

However, nearly 200 traders have been fighting for months over plans for a former retail space to be redeveloped into a Costa coffee shop.

The traders have claimed it would set a dangerous precedent that risks ruining the market town by diluting safeguards previously in place to put the emphasis on A1 retail use. Wendy Moore, who runs a deli in the town, said the move risked Belper “losing its identity.”

“I have nothing against Costa as such but it is the principle of the thing. Previously, local planning laws were very firm that this was a site for A1 retail use only. Allowing it to move to A3 use to become a coffee shop is a slippery slope,” she said. “It’s the loss of retail I object to and that is why the traders were so furious about it. More than 200 of us wrote to the council but it was to no avail.”

David George, who runs Transition Belper, added: “I guess there are two ways to look at it. The fact Costa is moving in could mean all the local coffee shops raise their game and fight off the competition. That’s what happened when Subway moved here.”

Announcing the results of the British High Streets competition last week, high streets minister Penny Mourdant said judges, working on behalf of the government’s Future High Streets Forum, chose the seven winning towns because of their “ability to demonstrate innovation, collaboration and initiative in helping their high streets adapt to the modern world and changing consumer habits.” As well as the advice service, Belper will share £50,000 with the other category winners.George said traders in the town had a long tradition of objecting to anything that could result in a loss of local character; for example, they fought a successful battle against Tesco, which in 2007 proposed building an 80,000 sq ft hypermarket on the former Thorntons chocolate factory outside the town.

Costa did not respond to requests for comment.