John Preston and his partner Peter Thornton's Woodville business Antique Fabric and Lace has been branded racist by the neighbouring shop.

'Twas a couple of weeks before Christmas and the Grinch was visiting Woodville.

The usually cheerful Manawatū town's Christmas parade was all but ruined as an ugly feud between neighbouring shopkeepers took a turn for the worse.

There for all to see on the local bookstore's window was spray painted the word "racist", with arrows pointing to the neighbouring fabric store.

Local businesswoman Gabriele Losch, 56, had initially put out a street sign in front of her shop, next to Antique Fabric and Lace, saying: "Do not shop there, my shop-neighbours are racist."

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Locals objected to the ugly sentiment in the middle of a Christmas celebration, so Losch spray painted the word "racist", with arrows pointing to John Preston, 63, and his partner Peter Thornton's, 76, store in her own window.

It was the first clear public sign of a long-running feud – a tit-for-tat exchange of slights and schadenfreude that piled up too high for either side to climb down from.

The feud started with a property boundary dispute and a garage, and it's now driven both sides to leave town to avoid harassment from the other.

Losch, a German immigrant who owns several buildings along Woodville's main street, sold Preston and Thornton their store's building when they moved from Auckland two years ago.

A year ago, the couple who lived in the back of their store, built a garage. It's impossible to get a vehicle to the back of the stores on that block without passing through another property – and the garage's placement made it even more difficult for Losch.

A furious Losch tried to get it demolished. She argued it was too close to the boundary, but the Tararua District Council disagreed. The garage stayed up, harsh words were said and the feud was on.

They duelled in court and exchanged trespass notices and warnings. They complained to the council and police whenever they suspected their enemy of violating a law or regulation. And they jealously guarded their property's border.

DAVID UNWIN/STUFF Gabriele Losch wants to leave Woodville after 10-years in business because of the ongoing feud with her neighbours.

​Losch's new fence "fell over", twice in a week. When shop displays hung over to Losch's side of the line, the fabrics were cut along the border's line or pulled down.

The fabric store's windows were spray painted to cover a trespass notice showing Losch's home address and somebody glued the locks to Losch's shop shut.

Each time the arguments and insults got worse – leading to the sign this week.

Preston said Losch was calling the couple racists because they once told the German woman she's acting like a Nazi over their garage.

And they did start needling her with references to Nazi Germany and World War II on their advertising sandwich boards and displays.

WARWICK SMITH/STUFF Woodville's main street where the current feud between neighbouring shopkeepers is ongoing.

They even made a point to reference Russian soldiers wearing fur and skinning animals while fighting Nazis, because they knew she was an animal rights activist.

Losch refuses to take the accusation out of her window. But she feels stressed and depressed after fighting a fruitless feud for so long. The real reason she closed The Living Room, her secondhand bookstore, was to escape the needling, name-calling and harassment, she said.

Losch moved out of town and only comes back a couple of times a week to sell the last of her store's stock. When it's gone, she's done with Woodville.

"People might laugh at how petty it all seems. But it affects you. It all adds up."

DAVID UNWIN/STUFF Gabriele Losch had this sign up in her shop's window before she spray painted the word "racists" with arrows pointing to her neighbours shop on the window.

Preston and Thornton are also leaving Woodville to escape the feud and plan to sell their store after Christmas.

"We decided its time to leave. Life's too short and the harassment is too much."

Losch rejected any suggestion her actions were related to the men being gay, saying she had been active in groups supporting gay rights in the past.

The final straw came on Wednesday night when Losch's accusation was painted over and they realised the feud would escalate again.

"It wasn't us," Preston said. "She'll blame us for that too, but a lot of people are unhappy about it.

"Just like she's certain I glued her locks because we were in a dispute over the garage. But she gets in a lot of fights and people have been gluing her locks for years."

Losch admitted she gets in a lot of disputes and has angered many people in Woodville.

"I am difficult. If I think something's wrong, I speak out ... It's like that [Edmund Burke] quote: 'The only thing necessary for the triumph of evil is for good people to do nothing'."

Co-owner of the New Central Motor Inn Teresa de Vries said Losch should be told to remove her accusation.

"The town's had enough trouble," de Vries said.

Local resident Evan Nattrass​ said it was a shame to see business owners not supporting each other.

"It's pretty appalling and doesn't reflect well on anybody... It's the sort of nastiness you can't really defend against, whether it's true or false, once its out there," Nattrass said.

Woodville police said there hadn't been any formal complaints about the sign. They had spoken to everyone involved and were aware of the ongoing dispute and were keeping an eye on it.

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