The Albert Town Four Square has managed PO boxes for the area, as well as operating as a satellite postal service for the area for many years.
However, NZ Post has announced this service will end this year.
Only Wānaka and Hāwea will continue to operate postal services in the Upper Clutha.
Albert Town Four Square owner Campbell Sinclair said the cut made no logical sense, given its location was only 100m off the main highway, on which posties already travelled to get to Hāwea.
"They are going to drive past us.
"We have 100 PO boxes at Albert Town and 75% of those are full.
"We do truckloads of track-and-trace for them."
Mr Sinclair said he had received a letter asking for feedback but was not hopeful his concerns would be heard.
"It is pretty much done and dusted. We are going to be axed."
Jeweller Amy Bixbyl, of Albert Town, said it would be a shame to lose the service, which she regularly used to post products to customers.
"It is handy and I like to support local businesses and like the idea of having a local dairy that does all of that."
NZ Post has also proposed cutting stores in Dunedin and Queenstown.
NZ Post general manager consumer Sarah Sandoval said decisions were not yet final.
"NZ Post is reshaping our urban retail network across the country to make sure we have the right number of stores in the right places — including in the Otago region.
"We’re not making any changes yet; we are mid-way through this process."
Ms Sandoval said NZ Post was making cuts because it believed it had duplication of services in many areas.
"This means we need to make some difficult decisions about where we’ll have stores moving forward," Ms Sandoval said.
"We’ve looked at data which tells us how customers are currently choosing to engage with NZ Post and identified eight stores in the Otago region we don’t expect to be part of the future network."
She said a decision would be made by October.
The majority of the stores on the chopping block had another NZ Post location within 5.4km, and one store was only 900m from the next available location.
The eight stores in question accounted for less than 1.7% of NZ Post revenue from all mail, parcel and payment services within the Otago retail network, she said.
State-owned Enterprises Minister Simeon Brown has told state-owned enterprises that like all commercial entities they need to make commercial decisions that enable the company to be profitable.
However, a statement from Mr Brown’s office said this was an operational matter for NZ Post.
"Decisions about service levels and network changes are made by NZ Post, as an independent state-owned enterprise, and the minister is not involved in those decisions," the statement said.
