A huge new city centre Ikea store looks set to create around 1,000 jobs in Coventry.
The news comes as the flat pack giant looks set to take on the UK high street with a string of outlets.
It is unclear whether it plans any further stores in the West Midlands, with the company unable to comment.
However, Coventry City Council says it has been trying to encourage the Swedish business into its main retail centre for five or six years.
It is understood the seven storey building - three of which will be for parking - will cost around £55 million.
The move will be the first time the company has built in a city centre.
The council's director of city development John McGuigan said planning permission had been granted for the site of the closing Co-op store on Queen Victoria Road.
He said: "We are aware that the city's retail offering is not as strong as it might be and we believe the store will greatly add to the city's retail proposition and help bring people into the central shopping area."
Mr McGuigan said it was expected the 30,000 sq ft site would employ around 500 people, with a further 500 jobs coming as a knock-on effect of the development.
It is understood preparatory work on the new store is due to start soon after the Co-op shuts, with the loss of 100 jobs, at the end of the month. The new Ikea is set to start trading around September 2007.
Alan Durham, a spokesman for Coventry and Warwick-shire Chamber of Commerce, said plans must be made to ensure Ikea shoppers explore the rest of the city centre.
He said: "There is no doubt that this represents a massive opportunity for everyone connected with the city centre.
"Every effort now needs to be made to ensure that shoppers at Ikea - many of whom will be new to the city and will travel in from considerable distances - know about and visit the main shopping area."
Midlands Co-op has said it is closing its store following competition from out of town retailers.
Ikea's plans for outlets in and around city centres were revealed by UK boss Peter Hogsted.
The company, which normally favours out-of-town locations, looks set to launch an assault on rivals in the embattled furniture sector with ten new stores - as well as a home shopping service.
Mr Hogsted reportedly said: "The only way we can expand in the UK is close to city centres and we have decided to do that."
Planning laws had frustrated attempts to build outof-town warehouses.
The developments will be closely monitored by rivals in the UK furniture market, as consumers rein in spending on big-ticket items. MFI and Kingfisher owner B&Q are among those to have complained about tough trading conditions in the past few months.
It is expected the remainder of the new stores will open over the next three years and be around half the size of the Coventry site.
Mr Hogsted said Ikea's preferred location was outside cities but it had to comply with planning requirements.
He warned it would be more expensive to open inner-city stores - meaning prices would have to rise over the long term. "In the end only the customer can pay for the retailers' increased construction costs."
Mr Hogsted also said Ikea was planning a "soft launch" for its new internet ordering service, testing it in the summer before a full-scale roll-out later this year or early 2007.
The latest expansion move emerged ahead of a bid by Danish retailer Ilva to break into the British market this year.
Privately-owned Ikea entered the UK in 1987 with its first store in north London.