The argument goes that the larger stores are now too big as customers either have home deliveries or shop more frequently and purchase in smaller quantities. So the retailers are thinking of other things to fill the space.
Sainsbury's larger stores along with the other major supermarkets already sell household goods, electrical and clothing. Not only that, the goods are on display to examine before purchase, so there is some overlap with the items Argos sells.
Argos made sense when their prices were noticeably cheaper to reflect the lack of items on display, but I don't think there is a price differential now. I still use them for convenience as they have a local store and the range of goods is impressive.
I'm a Sainsbury's shareholder and see this as an unwelcome risk.