Argument: Loss leaders are an inexpensive option available to less well-off customers.

The use of heavily discounted loss-leaders is good for shoppers, especially low-income consumers, who are most appreciative of a bargain that will help them stretch their limited budget. Customers are not stupid but instead canny consumers who are well able to see through the marketing ploys of the big retailers. Often price-conscious shoppers will stock up on the most heavily discounted items, but then go elsewhere for the rest of their shop. On the other hand, attempts in countries like France to regulate retailers have just resulted in protection for the existing firms that dominate the marketplace, and in a lack of competition, which drives up the cost of the weekly groceries for everyone. The same items can cost 30% more in France, where loss leading is banned, than in Germany where it is not and discount stores flourish1. Prohibiting this strategy will hurt consumers. 1: Economist, "Purchasing-power disparity: French shoppers want lower prices, but not more competition," May 15, 2008.

Candidate 1: "The use of loss leaders allows greater competition in the retail sector. It helps to drive the overall level of prices down by allowing much greater variation in pricing than would be possible if all goods had to be offered at cost price plus a small profit margin. Loss leaders also allow new entrants to make an immediate impact upon a mature marketplace dominated by a small number of entrenched incumbents, and so they are a valuable tool in maintaining price competition over the long term."
Candidate 2: "There is a good and a bad side to loss leaders for consumers, but prohibiting the practice will always be worse. The obvious benefit to consumers of loss leaders is that they are inexpensive goods to buy. While it is possible that some people will then buy more expensive products because they have entered the store, every item has a price tag, so the customer is always aware of his decision, which means this is not a predatory practice.

Banning loss leaders, on the other hand, is catastrophic for consumers, as it will always result in prices rising. When announcing the repeal of Ireland's loss leaders prohibition, Irish Minister for Enterprise, Trade &amp; Employment Micheál Martin said, “Very simply, the [law] acted against the interests of consumers for the past 18 years.”1 Loss leaders have positive and negative effects on consumers, but a ban is all bad.

1 Ireland Business News, “Groceries Order abolition.”"
Candidate 3: "Loss leaders do not help lower-income customers because they are aimed at people who will buy a lot of expensive goods at the store. Patrick DeGraba of the U.S. Federal Trade Commission argues that, when retailers act strategically, loss leaders are aimed at highly profitable customers1. Retailers have no interest in targeting less well-off consumers, because they won't then spend a lot of money in the store. Therefore, they are more likely to offer a high-quality item below its true cost; this will still be too expensive for many people, though. For example, stores will offer discounts on high-quality turkeys at Thanksgiving, because people who buy them are likely to buy a lot of food. Loss leaders may provide discounts for some consumers, but prohibiting the strategy would not hurt lower-income customers. 1: Patrick DeGraba, "Volume Discounts, Loss Leaders, and Competition for More Profitable Customers," Federal Trade Commission Bureau of Economics (Working Paper 260), 2003."
Candidate 4: "The use of loss leaders in marketing campaigns can benefit both retailers and producers. Below-cost price offers are typically used at the introduction of new products in order to encourage consumers to try something for the first time. Whether it is a new vegetable or cheese, a different breakfast cereal or an improved type of soap powder, it is in the interest of farmers and manufacturers to build consumer awareness and market share quickly. In the long run, if consumers like the new product, prices will rise and both producers and retailers will profit from it, so it is quite reasonable that producers are asked to share in the costs of launching it at a discount."
Candidate 5: "The government should be able to stop large retailers from exploiting consumers and producers. There is no doubt that retailers have a reason for selling items below market value, but they are only able to profit from such an illogical strategy by exploiting consumers and producers. They trick consumers into buying more expensive items and they force producers who have minimal leverage to lower the wholesale price in order to take the loss leader price into account."
Candidate 6: "It is not the government's place to force lifestyles on people. There is plenty of information around on what constitutes a balanced and healthy diet; people should be left to make up their own minds about what they buy with their own money. In any case, loss leaders make very little difference to the overall price comparison between processed and fresh food. Fresh food like fruit, vegetables and raw meat is expensive because it will soon rot and so it incurs higher transport and storage costs than processed food with a long shelf life. If governments want to change the balance in costs, they would be better off putting a tax on the unhealthiest foods rather than interfering arbitrarily in the realm of the marketing."
Candidate 7: "If retailers need to unload an item, it is totally within their rights to do that, as long as they don't use that item to trick consumers into buying more expensive items. Selling off goods at a low price, when not planned, would also not harm producers because it would not be a case of "retail price management (RPM)," in which producers agree to sell the product for less to the retailer."

Loss leaders do not help lower-income customers because they are aimed at people who will buy a lot of expensive goods at the store. Patrick DeGraba of the U.S. Federal Trade Commission argues that, when retailers act strategically, loss leaders are aimed at highly profitable customers1. Retailers have no interest in targeting less well-off consumers, because they won't then spend a lot of money in the store. Therefore, they are more likely to offer a high-quality item below its true cost; this will still be too expensive for many people, though. For example, stores will offer discounts on high-quality turkeys at Thanksgiving, because people who buy them are likely to buy a lot of food. Loss leaders may provide discounts for some consumers, but prohibiting the strategy would not hurt lower-income customers. 1: Patrick DeGraba, "Volume Discounts, Loss Leaders, and Competition for More Profitable Customers," Federal Trade Commission Bureau of Economics (Working Paper 260), 2003.
