It's definitely an oversimplification on my part. Looks like it's a bit of both methods depending on scale and the particular product market. The suppliers comp

It's definitely an oversimplification on my part. Looks like it's a bit of both methods depending on scale and the particular product market. The suppliers compete with each other for shelf space via payments, and the supermarket sells the product at very close to cost (or at cost during sales), to the point where shelf space related payments are basically equal to profit for the market. https://www.bbc.com/news/business-29629742 https://www.bbc.com/news/business-29629742 Relating back to the initial part of the question, it seems like if suppliers are fighting over the "good spots" (the ends of the aisle or section), then the supermarket's branded products can safely fill in the gaps at lower prices (but much better margins), and still be profitable as long as they don't lose too much to waste.