How supermarkets decide what you pay for a basket of groceries

Most shoppers believe they know whether a supermarket is expensive, and supermarkets know exactly which items that belief is built on. Milk, bread, bananas, eggs, butter: a small set of frequently bought staples, known in the trade as known value items, where customers remember prices and notice changes. These are priced with brutal discipline, sometimes below cost, because losing the cheapness perception on them poisons the whole store.

The margin comes back elsewhere. Products bought rarely, in unusual pack sizes, or on impulse carry the recovery. Spices, batteries, greetings cards, prepared foods and anything at the till or the aisle-end is doing heavier lifting than its shelf neighbours. The result is that a store can be genuinely cheap on the fifty items a family buys weekly and comfortably profitable on the two hundred it buys occasionally, while the shopper's impression is formed almost entirely by the first group.

Promotions add a second layer. Multibuys and temporary price cuts shift volume between weeks more than they save shoppers money overall, and the regulator has in the past required changes to practices such as inflating a "was" price briefly to advertise a deep cut from it. Pack architecture works alongside promotion: shrinking a pack while holding its price, which has its own popular name in shrinkflation, changes the unit price without touching the number on the label.

The loyalty-card turn

The biggest recent shift in British grocery pricing is the move of discounts behind loyalty schemes. Member pricing means the shelf now shows two prices, and the lower one is bought with data rather than cash. For the retailer, the scheme does two jobs at once: it makes the headline price comparison with rivals look better, and it feeds the purchase history that shapes ranging, promotions and increasingly personalised offers. For shoppers, the practical effect is that opting out of data sharing now carries a visible grocery surcharge.

Against all this, the shopper's best instrument is the small print on the shelf label: the unit price, expressed per hundred grams or per litre. It cuts through pack sizes, multibuys and member pricing, and it is mandated precisely because every other signal in the store is designed. A basket chosen by unit price will quietly beat a basket chosen by promotion stickers in most weeks of the year. The system is not a conspiracy, but it is an architecture, and it rewards the few customers who read it the way its designers do.