The 1970s market building appears outdated next to newer developments elsewhere in the town such as New Square Shopping Centre, say councillors.
And although the market is profitable, councillors have grown concerned as the loss of traders has accelerated in the last two years.
Changing habits such as the rise of online shopping are also thought to have impacted on trade despite stall holders' fees being cut.
A consultation will be launched next week to seek the views of traders, shoppers and industry leaders.
It will seek to draw up a detailed business plan to transform the indoor market and improve that part of West Bromwich town centre.
Sandwell Council cabinet member, Councillor Bob Lloyd, said: “The West Bromwich indoor market has many loyal customers who have grown up with the market since it opened in the early 1970s, as well as a wide range of goods to attract customers but despite this vacant stalls have been increasing.
“In recent times, shopping habits have changed and despite cutting stall holders’ fees to help existing traders and encourage new ones, we recognise that we need to do something more radical to revitalise the market and regenerate this area of the town.
“We need to build a modern and more attractive market facility which includes other businesses and residential apartments, and we need to explore potential investment and partners to work with us to redevelop it.
“This consultation provides us with an excellent opportunity to get people’s view and push ahead with this exciting development for West Bromwich."
If approved, the consultation will be carried out during the next few months.
Following the consultation, a report outlining the preferred option for redevelopment will be brought back to the cabinet within 12 months.
Councillor Lloyd added the council had also submitted an expression of interest for funding from the Future High Streets Fund.
This would help it buy and demolish sites, get land ready for development and improve public areas in West Bromwich town centre, as part of its wider regeneration plans.
The aims of the fund are to invest in high-quality town centre living by improving transport networks, converting former shops into new homes, and restoring historic high street buildings to create new workspaces or cultural venues.
Rebecca Jenkins, chair of the West Bromwich Business Improvement District, said: “I am pleased to see that the council is committed to the ongoing redevelopment and improvement of West Bromwich town centre.
“The indoor market needs to be brought up to date to meet modern shoppers’ expectations. I look forward to the opportunity for businesses to give their views in the forthcoming consultation.
"I also welcome the council’s efforts to access funding from the Future High Streets Fund so as to support a more strategic development of the town centre."
If successful the council will be asked to submit a funding bid later in the year.
A report to be discussed at next Wednesday's cabinet meeting.