A common retail strategy involves pricing select items below cost to attract customers. This tactic aims to stimulate purchases of other, more profitable goods within the store. A major retailer, for instance, may significantly discount milk or bread, knowing that shoppers will likely purchase additional groceries during their visit.
The purpose of this pricing approach is multifaceted. It can boost overall store traffic, increase sales volume across different product categories, and enhance the retailer’s reputation for offering value. Historically, this method has been used to compete with rival stores and quickly gain market share, often proving effective during economic downturns or periods of intense competition.
