Aim: The aim of this study is to examine and compare the importance of services and products in grocery store and to study the effects of services and products on customer retention. Method: This study is quantitative and data is collected by conducting a survey. Primary data is collected through questionnaires by visiting the stores in two cities of Sweden, namely Bollnäs and Gävle. In order to study the importance of service and products, importance scale is used in the questionnaire. Comparative analysis is used to analyze the data. Results & Conclusions: The results show that customers are more concerned about the quality of products rather than quality of services. Further, it is found that among all service elements, personal interaction is considered more important whereas, among products elements, quality of products has most influence on customer decisions. After the comparison of services and products, we found out that product quality influences customer retention to a greater extent. Suggestions for future research: Research always continues and could be followed up with more perception dimensions either from customers’ perspectives or from managerial perspectives. Future research can be conducted to study managerial perception of service and product quality. Furthermore, future research can be conducted to find out other factors that determine customer retention. Customers from multiple stores and larger cities can also be the theme for future researches. Contribution of the study: This study helps retail business to build strong customer base by focusing first on quality of products and then services. Further this helps firms to know how customer’s decision making is affected. Firms with limited resources can first focus on product improvement then on services.

This thesis is focused on evaluation of the service quality in selected retail outlets or shops. The main goal of this thesis was to evaluate the level of customer service while engaged in the transaction of selling pre-selected goods in selected retail outlets. Based on the results of this evaluation, a sub-goal of this thesis was to either validate or to disprove the given hypotheses. As an introduction I define basic terms of service quality, customer satisfaction with a service, marketing Research and mystery shopping. . After depicting the basic theoretical principles of mystery shopping, I moved on to the practical (hands-on) portion of my thesis where I evaluate retail outlets for pre-selected company. Evaluation is carried out by using mystery shopping. After conclusion of mystery shopping, the data was analyzed and synthesized, which allowed me to evaluate the results and draw appropriate conclusions, proposal and recommendation to the pre-selected company.