Step 1: Create New App

 ng new app-material 

Step 2: Add Material Design

Now you have to install the material library in the angular app. So, we can use angular material components:

 ng add @angular/material

Step 3: Import Module

first, we need to import MatFormFieldModule and MatSelectModule. so let's update app.module.ts.

Let's follow the steps:

src/app/app.module.ts

 import { NgModule } from '@angular/core';
import { BrowserModule } from '@angular/platform-browser';

import { AppRoutingModule } from './app-routing.module';
import { AppComponent } from './app.component';
import { FormsModule } from '@angular/forms';
import { MatSelectModule, MatFormFieldModule } from '@angular/material';
import { BrowserAnimationsModule } from '@angular/platform-browser/animations';
import { DropdownComponent } from './dropdown/dropdown.component';

@NgModule({
  declarations: [
    AppComponent,
    DropdownComponent
  ],
  imports: [
    BrowserModule,
    AppRoutingModule,
    FormsModule,
    MatSelectModule,
    MatFormFieldModule,
    BrowserAnimationsModule
  ],
  providers: [],
  bootstrap: [AppComponent]
})
export class AppModule { }

Step 4: Create a new component

ng g c dropdown   

Here, you have to update the HTML template file as below:

src/app/dropdown.component.html

<div class="container">
    <h4>Angular Material Select with Image Example</h4>

    <mat-form-field appearance="fill">
        <mat-select placeholder="Select Categories">
            <mat-option *ngFor="let category of categories" [value]="category.id">
                <img with="20" height="20" [src]="category.image">
                {{category.value}}
            </mat-option>
        </mat-select>
    </mat-form-field>
</div>

Step 5: Update Ts File

Here, you have to update the ts file as below:

src/app/dropdown.component.ts

import { Component, OnInit } from '@angular/core';

interface Category {
  id: string;
  value: string;
  image: string;
}

@Component({
  selector: 'app-dropdown',
  templateUrl: './dropdown.component.html',
  styleUrls: ['./dropdown.component.scss']
})
export class DropdownComponent implements OnInit {

  constructor() { }

  ngOnInit(): void {
  }
  categories: Category[] = [
    { id: '1', value: 'JS', image: 'https://www.itsolutionstuff.com/category-images/javascript.svg' },
    { id: '2', value: 'Git', image: 'https://www.itsolutionstuff.com/category-images/git.png' },
    { id: '3', value: 'Laravel', image: 'https://www.itsolutionstuff.com/category-images/laravel.svg' },
    { id: '4', value: 'Bootstrap', image: 'https://www.itsolutionstuff.com/category-images/bootstrap.svg' },
    { id: '5', value: 'Angular', image: 'https://www.itsolutionstuff.com/category-images/angular.svg' },

  ];
}

Here, you have to update the app.component.html file as below:

we have to call the dropdown component in the app component 

<app-dropdown></app-dropdown>

Run Angular App:

All the required steps have been done, now you have to type the given below command and hit enter to run the Angular app:

 ng serve --open

Now, Go to your web browser, type the given URL and view the app output:

 http://localhost:4200

Output