You get people into your shop and spending if you can offer them bread, or beer, or whatever, for less than anyone else. You make up the difference in the mark-up on other products.
It's a business model that's only really open to the big bulk retailers who can afford to gamble on the customer buying more profitable additional items from the large range available. Until recently the Irish State sought to protect smaller retailers, and consumer choice, by limiting the size of retail space and banning below-cost selling.
Big stores and below-cost selling are the chief reason that Tesco own most of the UK now.