Yes they absolutely do. No store is going to give margin away. They won't be making a loss but the last thing they want to report to investors is 'weve given some of your cash away'.
You're right revenue may increase due to increased sales, but folk will still be looking at the margin figure.
IIRC Iceland stated a few months ago that they were going to do everything they could to hold their own brand pricing, basically even if it cost them "margin".
Apparently their research told them that a fair number of their customers couldn't afford a price hike, and would likely end up going to foodbanks and not another retailer if the prices rose too much.
So they made the decision to try and avoid increasing their prices which can for a company be a triple win, it's good for the PR (we're doing our best to help), it's good for the "ethical" shareholders (we're doing something to help even if it costs us a few percent in dividends), and it's good for the long term neutral investors (we're at least seeing the money being spent here, even if it's not quite as much profit). Companies can/do have a responsibility to make as much profit as they can, but you can look at that as "we're going to squeeze every penny in the short term" or "we're looking at more than just this financial year", often the latter* do better than the former as they'll be more likely to try and retain customers (which is often cheaper than trying to get new ones), and experienced staff etc
Retailers absolutely will sacrifice short term profits for longer term gains and potentially getting people to either stay with them, or move to them from a more expensive option.
It's a large part of how the likes of Amazon got to where they are, they were basically willing to sell almost at cost/for very little profit for years until they got enough of a foot hold to start increasing their margins.
From memory part of the reason the likes of B&Q used to do it was because their research told them that the older people tended to be willing to spend more time maintaining and improving their homes (and likely owned so were willing to spend on, whilst not necessarily having a huge amount of spare cash), so they probably worked out that by offering a discount it could increase their sales of high margin, high volume items, especially seasonal stuff and get the older customers to go out of their way to spend money with them rather than potentially an easier to reach retailer that was slightly more expensive after allowing for the discount. By doing it on the day they did it meant that the hoped for increase in older customers would be on a day when their store might have been a but quiet (but still needed full staffing) compared to say a weekend, and at the same time they might end up taking friends/family who would see things they might go back for another day.
It was also part of a company policy that was specifically aimed at making them look better, and friendly to the older folk, as IIRC they also had a policy of specifically trying to employ older people (OMG ageism!) especially those who had worked in various of the "trades", as it meant they were getting people who typically had a harder time getting a job, getting people who were less likely to have family issues. and getting people who were typically more knowledgeable than say the average 18 year old in who is basically working there as another "retail job" and often has no clue as to what they are selling.
*One of the huge problems in many once good companies is that they'll get a new CEO or something who is hired to "increase shareholder value" and does it by looking at what will give the short term increase, so they'll do things like cut the "non profit" making parts of the company, usually things like CS and R&D because they don't show anything in "sales", the damage is usually own seen a few years down the line when they don't have many new products and once loyal customers who were willing to pay a little more are now going to competitors because the competitors may not have quite as good a product (yet, but they may have retained their R&D) but have much better customer service so when something goes wrong it's sorted.
only discounts.
