Sept 14 (Reuters) - Wal-Mart Stores Inc said on Friday it had failed to reach a deal with a developer to have a store in Brooklyn's East New York neighborhood, dealing the company a setback in its attempt to open its first location in the largest U.S. city.

Wal-Mart, the world's largest retailer, had been in talks with Related Companies to open a store that would have anchored the Gateway Two Plaza development in Brooklyn. A Shop Rite supermarket will instead occupy that space.

In a statement, Wal-Mart said it would continue to look for a site, adding that most New Yorkers want the discount giant to open a store in their city.

"We remain committed to bringing new economic development and shopping options to New York City, especially in the neighborhoods that need them most," Steven Restivo, Wal-Mart's senior director of community affairs, said in the statement.

Wal-Mart has faced opposition from some groups in New York that say it does not pay its workers adequately and would drive out small local businesses.