How can retailers boost profits? This study explores the application of the service profit chain model within a leading UK grocery retailer, challenging conventional wisdom about employee satisfaction. Analyzing the relationships between key factors such as profit, customer loyalty, and service value, the research uncovers surprising correlations. Contrary to the model's central premise, the study reveals a strong link between employee dissatisfaction and store profitability, prompting questions about the mirror effect between employee and customer satisfaction. The research delves into the intricate connections between internal service quality, output quality, and productivity. By examining real-world data, the authors offer valuable insights into the drivers of business success in a competitive retail setting. The findings contribute to ongoing discussions about the service profit chain and highlight the need for a contingency-based understanding of business performance. The study's implications extend to management practices, urging a reevaluation of strategies focused solely on employee satisfaction. This research serves as a catalyst for further exploration, advocating for a more nuanced, contingency-based understanding of the drivers of business success. It highlights potential practical applications in tailoring management approaches to specific retail environments.
Published in the International Journal of Service Industry Management, this paper contributes to the journal's focus on understanding service operations and customer relationships. By examining the service profit chain in a real-world retail context, it offers valuable insights for academics and practitioners interested in improving service delivery and enhancing business performance. The study also raises important questions that could stimulate further research in the field.