Other options will be pursued by Walsall Council after the firm said it had shelved proposals to overhaul and double the size of the store, creating 150 jobs.
Alternative retail uses of the council land, which had been earmarked for revival as part of the expansion of the Silver Street supermarket, will now be open for developers to put forward regeneration proposals.
The former Brownhills Market site has been standing empty for almost two years since its failed relaunch ahead of the redevelopment of Tesco. Council leader Mike Bird said: "We are open to all suggestions. But it would have to be a retail element."
There had been proposals for a smaller market near High Street as part of the Tesco revamp but these now also face being scrapped. The original market in Silver Street was scrapped just over six months after its return in summer 2011.
There were 80 stalls following its initial two-day-a-week relaunch but that dwindled to a handful of traders inside six months.
The once thriving event suffered in the final few years of its existence. In June 2009 it closed after then landlords Spook Erections failed to agree a new contract.
Weeks later it was revived by council bosses but collapsed again in early 2010.