Dudley Council's planning committee voted in favour of a new Aldi in Bilston Street, Sedgley during a meeting on Wednesday evening.
The new store will occupy a public car park and the site of the former Gould's electrical store.
The car park of the neighbouring Red Lion pub will also be reconfigured.
The scheme had attracted 53 letters of support and one objection on the grounds that the site would increase traffic congestion and pollution in the area.
Councillor Andrea Goddard, vice-chair of the planning committee, said the majority of members had voted in favour of the application, with one against.
Councillor Goddard, who voted for the development, said: "I thought it was very good for the regeneration of the area. "The plans were pretty decent. It came back that there would be no issues of flooding.
"The local school parents will also be able to use the car park for 90 minutes so they can drop pupils off safely."