The effect of service quality on customer satisfaction and loyalty and the mediating role of customer satisfaction

Purpose The purpose of this study is to determine the effect of service quality on customer satisfaction and loyalty and the mediating role of customer satisfaction in the supermarket sector. Design/methodology/approach In total, 480 supermarket customers participated in an intercept survey in four urban centres of Fiji. Descriptive statistics were used to determine the level of service quality provided by supermarkets, and inferential statistics to determine the gap between customer's service quality expectations and perceptions and to test the research hypotheses. Findings The findings indicate service quality of supermarkets is perceived as being unsatisfactory, service quality significantly affects customer satisfaction and loyalty and customer satisfaction partially mediates the relationship between service quality and customer loyalty reducing customer's perceptions of service quality, leading to lower customer loyalty. Practical implications This study provides an indication as to where supermarkets should target their marketing attention and scarce corporate resources and may help in their efforts to service, satisfy, retain and attract more long-term loyal customers in the increasingly competitive supermarket sector. This research could inform government policy makers in sequencing the supermarket sector transformation and assist local supermarkets to adapt to this changing retail landscape. Originality/value This study advances our understanding of the effect of service quality on customer satisfaction and loyalty and the mediating role of customer satisfaction in the supermarket sector.