The Market Square store will close before the end of the month

The Market Square branch - which trades under the name Walters - will cease trading on 27 January.

A spokesman for the firm claimed sales had been hit since the introduction of the new traffic scheme last year.

A Scottish Borders Council spokesman said it was "surprising" the system had been cited as the reason for closure.

Lothian Borders and Angus Co-operative Society (LBACS) said it would continue to operate its High Street store in the town.

The recent opening of large 24 hour Tesco and Asda superstores in Galashiels a few miles away is obviously putting pressure on retailers in nearby towns Callum Hay Scottish Borders Council

Chief Executive Bob Jamieson said it could not justify investing in the Walters site which it had run for four years.

"A downturn in sales at the beginning of last year was triggered by the introduction of a new one-way system in the town which has adversely affected pedestrian access and parking relative to the store," he said.

"The resultant decline in custom has taken it below the level of profitability required to justify the much needed further investment in the building's fabric."

The society leases the property and said it would be looking for replacement tenants as soon as possible.

SBC's Director of Technical Services Callum Hay said the introduction of the scheme had been approved by the majority of the community and had brought many benefits.

Retail pressure

He said it was "surprising" the system had been cited as the sole reason for closure.

"The recent opening of large 24 hour Tesco and Asda superstores in Galashiels a few miles away is obviously putting pressure on retailers in nearby towns," he said.

"I suspect that this too will have had a impact on the Co-op's decision to close one of their two Melrose outlets."

He added that with another Co-op nearby the council was satisfied that shoppers would not be disadvantaged by the decision.