Hi bigreader. It's not the tiles in the niche that are the problem. In fact, one piece of tile (30 x 60) will fit perfectly with no grout lines. It's the wall tiles around the niche space that will not line up with the side edges of the niche

I have mine on the side wall. Works quite well and is easy to acess.

Sorry. This post wasn't finished before it went up. Then I lost it !!! Redone here with pics. https://www.houzz.com.au/discussions/5813350/please-help-with-thoughts-on-shower-niche-position#24746689

It’s a simple concept but incorporating a shower niche (or recess) into your new bathroom could transform your morning routine. No more precariously perched shampoo bottles on the ledge of the tub and you can banish the ugly shower caddy hanging from the shower head. Shower niches are neat, tidy ways to store your bathroom products and can turn your bathroom into a sleek, luxurious resort-style space. Put simply, a shower niche is a waterproofed shelf recessed into the wall cavity, usually between the wall studs. They can be lined with tiles or other solid surface such as marble or stone. A shower niches can be discreet, tucked away out of the direct line of sight, or it can double as an architectural feature, using eye-catching décor elements. One common strategy to achieve this ‘wow’ factor is to use tiles in a different style or colour than those used for the rest of the walls. Some clients like to incorporate double “His ‘n Hers” niches. There’s also the option for a low-lying niche (great for kids, or for using as a foot rest for washing or shaving). What about a lower shelf for shampoo and conditioner, and a smaller higher shelf on top for soap? Vertical niches with multiple shelves can emphasise the height of a space (useful for small bathrooms or enclosed shower units). And don’t forget, niches are not just for the shower – they can be gorgeous above a bath or between a vanity and mirror. A shower niche needs to be built in during the early stages, before waterproofing and tiling. It may even influence your tile choices. Shower niches come standard with every home build by Horizon Homes. It is another reason why the design process at Horizon Homes begins with you meeting with our designer to discuss your specific brief, design ideas and budget…. and includes the builder’s input from the outset.