The UK’s largest sports retailer, Sports Direct, owned by former squash coach Mike Ashley, is “in talks” with UK supermarket chain Tesco, according to a report from the Financial Times. Sources “familiar with the situation” told Financial Times that Sport Direct may install stores inside of Tesco’s largest supermarkets, possibly on its mezzanine floors.
Sport Direct already rents space from Tesco in the form of standalone units, but the move to operate within Tesco stores would represent a new strategy for both companies. As non-competing companies, the athletic retailer would gain foot traffic; the supermarket chain would gain market share and maximize efficiency.
Tesco has struggled in the last year to make use of excess space in its “hypermarkets,” some as large as 120,000 square feet. E-commerce has continued to reduce the need for excessive physical space, and consumer trends have recently favored small, local grocery stores.
In what may prove to be a trial run, a Czech Republic Tesco recently ceded about 30,000 square feet (of an 80,000-square-foot store) to Sports Direct. Spokespeople from both Sports Direct and Tesco declined to comment on the outcome of any negotiations.