Developers say a decision by retail giants Marks & Spencer to open in Bangor will bring more shoppers into the region.
The new store will be on the former site of a police station
It will also create around 50 new jobs when the new store opens in spring 2005.
M&S are building the store in the proposed new Wellfield shopping centre.
Developers Cathco said this move by a major high street retailer and the size of the Wellfield scheme would have a marked impact on retailing in north west Wales.
The new store will take up the site of the former police station and magistrates' court, occupying the first phase of the £25m re-development of the city's main shopping area.
Cathco spokesman Nigel Dick said: "We see M&S as a catalyst to attracting more shoppers into Bangor.
"We are delighted to have let the first phase of the project to such a high-profile anchor tenant. This early deal bodes well for the future redevelopment of Wellfield."
Existing shopkeepers on the Wellfield site have voiced their concern about not being offered leases on the new development, but Mr Dick offered his reassurances.
"We have just started negotiations in the past six weeks and it is early days yet.
Development "will boost" shopping in north Wales
"Many of our existing tenants have long leases and we have already come to terms with some of them."
Work will begin next month and the store is due to open at the start of 2005.
A spokesman for surveyors Warwick Smither, Cheetham and Mortimer said: "For years the people of Bangor have wondered why the city did not have a Marks & Spencer store.
"The size of the redevelopment and its undoubted impact on retailing in north west Wales has given the company the confidence to open a store."
M&S spokesman Chris Newsome said: "The store we're opening at Bangor highlights Marks & Spencer's ongoing commitment to Wales.
"The construction, along with the redevelopment of the Wellfield shopping centre, will transform the central shopping area of the town, which is sure to benefit the people of Bangor."