Friends of the Earth hailed North Norfolk District Council's decision to turn down the proposal in spite of endorsement from planning officers as "a victory for the local community".
The Campaign to Protect Rural England agreed that the 1,500m2 store would have damaged the town's economy, even though the council's specialist retail planning officer said it would result in greater footfall and increased spending in Sheringham town centre.
The council argued that its emerging local development framework specifies a development of no larger than 750m2. It raised further concerns over the scheme's impact on a nearby listed building, increased traffic and declining local trade.
A Tesco spokesman told Planning that a store would sustain the area. "The majority of people shop in Cromer or further afield because traders are not providing enough opportunities. We want to secure the future of Sheringham," he said.
A previous application for a Tesco superstore was submitted in 1998. It was followed by a controversial clause between the council and Tesco in 2003.
This stated that the council would sell land to the retailer if it gained permission and prevented it from selling other pieces of land to competing developers. Tesco launched an appeal for non-determination before submitting its second proposal.