Perhaps I misunderstood your original statements. You asked who would willingly “give back money” by lowering their price, and I said that strategy might net them more profit if they and their competitors were selling identical or interchangeable products (the definition of “product” to include the buying experience).
I thought your case in point of K-Mart, Macy’s etc., to be flawed and I pointed out why. They aren’t selling the same “product”. What were you trying to say that I missed?
They are selling the same product, but have differentiated it in the mind of the customer. This is how you get more money for something, by letting the customer perceive greater value.