The Taupo town centre is safe from the threat of a big-box retail park on the town's outskirts, at least for the medium term.

The National Trading Company, which owns Pak'n Save and New World operating company Foodstuffs, and Advance Property Group and NML Holdings, had proposed to put a supermarket and a big-box retail development on the East Taupo Arterial.

But local retailers, Towncentre Taupo and the Taupo District Council feared that allowing retailing there would suck the life out of the Taupo town centre.

Similar developments in Whakatane, Rotorua and Hamilton have dealt near fatal-blows to their city centres, which now struggle.

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So Taupo retailers are over the moon with a newly-released Environment Court interim decision which upholds the council's stance on not allowing retail activities outside the town centre.

While trade stores and "vehicle-based" retailing is permissible, a new Pak'n Save and retail outlets such as Harvey Norman are off the books, at least for now.

Citing a sluggish economy and stagnant projected growth, the Environment Court commissioners said there was "sufficient opportunity for large-format retail development to meet projected demand for new brands or expansion of existing brands in the town centre environment".

"Relocation of Pak'n Save from the town centre would have significant adverse effects on the function, amenity and vitality of that centre," they added.

Towncentre Taupo said the interim decision meant Taupo could continue to be recognised as a boutique town centre, rather than another town that has allowed unchecked retail progress.

Towncentre Taupo general manager Julie McLeod said putting a "power-house brand" such as Pak'n Save out on the East Taupo Arterial would draw shoppers there rather than into the town centre, and other shops would follow.

Life for small retailers is already tough, and a big-box (also known as large-format) retail park would only make that tougher, she said.

Taupo District Council group manager policy and operations Gareth Green said the council was "ecstatic" with the Environment Court's decision.

He said the decision's interim status did not relate to the issue of large-format retailing but another issue that was heard at the same time and needed further work.

"The process has been seven years in the making," he said.

"Without exception the court has accepted and adopted the council's decision and that's a nice place to be."