Microfluidic technologies are commonly used for the manipulation of red blood cell (RBC) suspensions and analyses of flow-mediated biomechanics. To enhance the performance of microfluidic devices, understanding the dynamics of the suspensions processed within is crucial. We report novel aspects of the spatio-temporal dynamics of RBC suspensions flowing through a typical microchannel at low Reynolds number. Through experiments with dilute RBC suspensions, we find an off-centre two-peak (OCTP) profile of cells contrary to the centralised distribution commonly reported for low-inertia flows. This is reminiscent of the well-known tubular pinch effect which arises from inertial effects. However, given the conditions of negligible inertia in our experiments, an alternative explanation is needed for this OCTP profile. Our massively-parallel simulations of RBC flow in real-size microfluidic dimensions using the immersed-boundary-lattice-Boltzmann method (IB-LBM) confirm the experimental findings and elucidate the underlying mechanism for the counterintuitive RBC pattern. By analysing the RBC migration and cell-free layer (CFL) development within a high-aspect-ratio channel, we show that such a distribution is co-determined by the spatial decay of hydrodynamic lift and the global deficiency of cell dispersion in dilute suspensions. We find a CFL development length greater than 46 and 28 hydraulic diameters in the experiment and simulation, respectively, exceeding typical lengths of microfluidic designs. Our work highlights the key role of transient cell distribution in dilute suspensions, which may negatively affect the reliability of experimental results if not taken into account.