Nathan Tongue, representing EG Group, told the meeting the proposal was one of a number around the country to replace under-performing petrol stations with convenience shopping facilities.
He said: "EG is committed to investing around £2.5m on the site including decommissioning costs.
"This is to ensure continued use of the site as a small scale convenience store occupied by an Asda.
"The application represents a positive and proactive approach to the management of the site which will enable the avoidance of long term vacancy, and the risk of less desirable uses prevalent on vacant petrol stations replacing current use."
However town hall planners had recommended the application be refused because the site is not in one of Blackpool's established or main shopping areas.
This meant it contravened policies and national frameworks designed to ensure such development "should be located in accordance with the retail hierarchy and the council’s regeneration strategy and aims."
Coun Graham Baker questioned the policy in view of the fact there is a Lidl supermarket opposite the site.
He said: "It's said it's not in a shopping area but opposite is a Lidl. If we don't approve this, are we giving a monopoly to Lidl?"
But the committee was told the scheme failed the sequential test which puts a duty on developers to seek sites in established retail areas before other sites can be considered.
Ahead of the meeting, an EG spokesperson had said the site was "an ideal location for this store, with excellent transport routes for local residents and those travelling through the area.
"Our innovative approach to roadside retail will enable the new store to become a fantastic new addition to the local area.”
Options for the developer to take the scheme forward could include submitting an appeal against the decision of the council.