What cheap bananas reveal about supermarkets and small businesses

Have you noticed recently that, even though many apples sold in the UK are homegrown while bananas travel thousands of miles, bananas are often half the price?

At first glance, it doesn’t make sense. But recent figures from the Office of National Statistics (ONS) show that dessert apples, on averag,e cost more than £2 per kilo, while bananas sit closer to £1. For further comparison, apples are almost a pound more expensive than they were last January, while this year’s bananas are only a few pence more expensive than last year’s.

While that does partly explain it, there’s more to the story. The bigger picture reveals interesting truths about supermarket pricing strategy, and this has important implications for how smaller retailers and independent food businesses should approach marketing.

The power of the “loss leader”

Bananas are one of the UK’s top-selling fresh products. Almost every household buys them. That makes them a strategically important staple for larger supermarket chains.

Rather than pricing each product individually for profit, supermarkets often look at margins across their entire range. In some cases, high-volume items such as bananas are used as “loss leaders”, which means they are sold at very low margins, or even at a loss, to attract customers.

Large chains can afford to do this because they spread the loss across thousands of other products. They also have advantages in logistics, buying power, and supply contracts.

Smaller retailers, farm shops, and independent grocers typically don’t have this added cushion and can’t absorb ongoing losses on staple items in the hope of making it back elsewhere. If they sell below cost, it will directly impact their cash flow.

Rising costs also hit smaller operators harder

It’s not just smaller shops feeling the pinch. In recent years, apple growers have faced significant cost pressures due to higher minimum wages, rising fertiliser and energy bills, storage costs, and broader inflation. Labour alone can account for around half the cost of apple growing.

Instead of passing these costs onto shoppers, supermarkets may squeeze suppliers. So while shelf prices for apples have risen, growers argue they still do not adequately reflect production costs.

For small food retailers and local producers, this adds even more pressure, which is harder to offset. They lack the purchasing scale of national chains and often pay more per unit for stock, packaging, and utilities.

The result is that large supermarkets can afford to offer shoppers a bargain, while smaller shops have no choice but to price more transparently.

Key takeaways for smaller shops

If they can’t compete on price, independent retailers may need to focus advertising on what supermarkets cannot easily provide, such as provenance, quality, seasonality, service, and trust. Explaining why a locally grown apple costs what it does can be part of that value proposition.

There is also a bigger question mark around sustainability. If staples such as bananas are consistently underpriced, pressure will inevitably build throughout the supply chain. In fact, it already has.

Alistair Smith, executive director of campaigning group Banana Link, told The Guardian that bananas are “undervalued, underpriced” and that, if they were priced in the UK to ensure everyone in the production chain was paid fairly, they should cost at least 50p more.

It shows that while supermarkets can sell bananas cheaply, it doesn’t mean that they should. Ultra-low prices are often strategic and definitely not a sign that the supply chain is ethical or sustainable.

In fact, small businesses that can’t match supermarkets on price are often charging closer to the true cost of labour, energy, and sourcing. While this may make them less appealing to budget-conscious shoppers, it can resonate strongly with values-driven consumers who prioritise sustainability and ethical practices, and who can pay a little more for it.