A handful of grocery lines are sold at or below what the retailer paid for them. The practice is deliberate and it rests on how shoppers judge whether a store is expensive.
Price perception rests on a few known items
Nobody can hold thousands of prices in their head. Instead shoppers judge a store by a small set of goods they buy often enough to remember: milk, bread, eggs, a familiar soft drink.
Those items carry disproportionate weight in the overall impression, and retailers know precisely which ones they are because purchase frequency makes them easy to identify.
Pricing that short list aggressively buys a reputation for value across the entire assortment, including thousands of items whose prices nobody is checking.
The basket recovers what the item loses
Very few people visit a supermarket for one product. The known-value item brings the trip, and the rest of the basket is bought at ordinary margins.
Because the loss applies to a single line and the recovery applies to everything else in the trolley, the arithmetic works comfortably in the retailer's favour.
This is also why the loss leader is rarely placed near the entrance. Walking further through the store exposes the shopper to more of the recovery.
Suppliers often share the cost
A brand that becomes the featured low price gains volume and visibility, so manufacturers frequently contribute through temporary trade terms.
The retailer's true loss is therefore smaller than the shelf price suggests, and in some cases there is no loss at all once supplier support is counted.
That support is negotiated in advance, which is why the same brands reappear in the same slots rather than the cheapest available product being chosen each week.
Purchase limits protect the mechanism
Below-cost pricing only works if the item is bought alongside other goods. Bulk purchases by one household, or by traders reselling elsewhere, break the model.
Quantity limits therefore appear on precisely these lines, restricting how many units a single transaction can include.
The limit is a signal worth reading. Where it appears, the price is usually genuinely below the ordinary market level rather than a modest promotional cut.
Regulation shapes how far it can go
Several jurisdictions restrict sustained below-cost selling, on the grounds that it can push smaller competitors out and raise prices afterwards.
The rules vary considerably by country and change over time, and enforcement generally focuses on prolonged campaigns rather than short promotions.
Retailers work within those limits by rotating which products carry the loss and by keeping each campaign brief, which is why the featured staple changes but the tactic does not.