Supermarket pricing in Australia, and in many parts of the world, is a dynamic and intricate system influenced by various factors.
Understanding the mechanisms behind pricing can provide insight into the cost of everyday goods and perhaps help you know when and how to get a deal.
A common strategy adopted by supermarkets is the use of “loss leader” products. These are items sold at a price below market cost to attract customers to the store.
The logic behind this tactic is that once customers are inside the store, they are likely to purchase other products with higher profit margins.
For example, a supermarket might sell bread or milk at a significant discount, enticing customers to visit the store and, while there, purchase other items such as fresh produce, meat or snacks that contribute to the store’s overall profitability.
