Swedish furniture chain Ikea is in talks to take over part of BHS's Oxford Street store as it looks to open its first outlet on one of London's prime shopping streets.
Retail Acquisitions, which acquired BHS for £1 from Sir Philip Green in March, is in discussions to sublet the ground floor of the store, said people familiar with the situation.
Ikea would take part of the space for a click and collect store.
"Over the coming year we plan to test three order and collection points in the UK, exploring slightly different formats in each selected market," the retailer said. "We will use these tests as an opportunity to find out more about how customers want to shop with Ikea in these areas."
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The group's first order and collection point opened in Norwich earlier this month. The second is due to open in Aberdeen in spring 2016.
"We are also exploring a number of other potential locations across the UK, one of which is the current BHS building on Oxford Street," Ikea said.
"While we are seriously considering this opportunity, we have nothing to confirm at this point in time while discussions are ongoing."
The development, first reported by The Sunday Times, underlines the experiments by big-box retailers with smaller format stores. Carpetright is experimenting with smaller high street stores, while Argos, part of Home Retail Group, is opening smaller outlets on high streets, as well as click and collect points in locations such as stations. B&Q, owned by Kingfisher, has also looked at more compact stores than its traditional big boxes.
In September, six months after the BHS deal, Retail Acquisitions, led by Dominic Chappell, secured £65m of funding from Grovepoint Capital, a London-based investment group, to try to revive the fortunes of the ailing department store chain.