Asda has won an appeal to sell clothes and shoes at its smallest supermarket in the UK, at Pwllheli, Gwynedd.
The chamber of trade says other firms have already lost business
Planning inspector Clive Cochrane said the change would have a slight impact on other local shops, but they would claw back other trade from outside.
It has been the only UK Asda without a George clothing and shoes section.
Gwynedd Council said it was "extremely disappointing," and traders said other shops were already losing business.
The council had refused Asda's original application to change the ratio of non-food items sold in the Pwllheli shop from 10% to 33%.
The council said raising the amount of non-food goods sold would affect the viability of the town centre.
But Mr Cochrane said that in his view Asda encouraged trips between the store and the town centre.
"There is no evidence that the introduction of the George clothing range and the limited range of top selling CDs, DVDs and books into this supermarket would meet all of the retails needs of the local population," he said.
Mr Cochrane added: "I conclude that the proposed variation of the condition will not harm the vitality and viability of Pwllheli town centre."
But Paul Brett of Pwllheli Chamber of Trade said: "We were sceptical that it was a forgone conclusion that this would happen.
"The effect of the Asda store on the town can already be seen with shops shutting.
"We feel the town is being hammered left right and centre and nothing is coming in for serious job creation," Mr Brett added.
Gwynedd council said: "We are extremely disappointed with the planning inspector's decision.
"It means that the company will be able to sell more non-food items. However it will not allow Asda to increase the overall retail floor space."