Gamification is a concept that is gaining significant recognition in the field of business administration in general and marketing in particular. Gamification has been gaining the interest of researchers recently with mostof the studies being conducted during the last three years. Gamification presents an opportunity for businesses to gain consumers’ attention and engagement through different aspects and elements of it. Organizations such as Pinchos, the restaurant have utilized those gaming elements in order to grow their revenues and keep the customers engaged while ordering food. Despite the exponential growth of gamification in the business world, studies on its marketing effectiveness and the influence of its elementsare lacking.To fill this gapin the literature, this researchaims to gain a deeper understanding of gamification and its different elements, byfocusingon the utilization of gamification as a digital marketing tool to enhance customer loyalty and retention in retail store setting. Therefore, this researchaimsfirst to identify all the factorsaffecting store choice. Second, identify and examine the different factors affecting retail store loyalty. Finally, the differentelements of gamificationare identifiedand their effect on loyalty are studied.In order to fulfil thepurpose of the studywe have collaborated with ChildrensHouse, a retail toy store located in Umea, Sweden, in order to gain insights from current and potential customers. A quantitative study was conducted,and the sample population chosen was generation Y parents, due to their digital literacy. To add a degree of credibility to the research, a short interview with Simon, the owner of ChildrensHouse, was conducted in order to gain managerial insights as well.The main conclusions of this research include,the different factors affecting retail toy store choices which were: store attributes, product attributesand demographics; the factors influencing loyaltywhich were: interpersonal communications, impersonal communications, direct experience, distance, value for moneyand engagement in gamified applications. Finally, the research results indicate that gamification when utilized as an engagement application will enhance customer retention and store loyalty.