They won’t lose money if they lower prices of key products in one single store and just a bit lower than their competitor the moment it becomes a threat. And even if they did, they would make it up later by having the whole market share. It’s no different than, let’s say, Uber burning money initially to win against all competitors then raising prices when they become the default platform people trust.

They know that after they have the market, it takes a significant upfront investment to bootstrap a competitor, which can only be done with investors money, which at that point won’t bet on the smaller company with a boring business model.