Digital Engagement and Customer Loyalty in Retail: The Mediating Role of Perceived Service Quality

Abstract

Purpose: In this study, the mediating role of perceived service quality (PSQ) in the relationship between digital engagement (DE) and customer loyalty (CL) in retail commerce is assessed, particularly in the context of omnichannel shopping settings. Design/methodology/approach: Using data from 350 Indian retail customers who shop both online and offline, this research uses Partial Least Squares Structural Equation Modeling (PLS-SEM) to analyze the interconnections among DE, PSQ, and CL. Findings: Digital engagement positively influences perceived service quality in a significant manner (β = 0.633, p < 0.001) and customer loyalty (β = 0.453, p < 0.001). Perceived service quality further has a beneficial effect on customer loyalty (β = 0.467, p < 0.001). Mediation assessment verifies that PSQ partly bridges the interconnection between DE and CL (β = 0.295, p < 0.001), accounting for a 69.1% variance in customer loyalty (R² = 0.691). Implications: Retailers should focus on providing uniform and superior service encounters across digital and physical platforms to enhance customer loyalty. Investments in digital tools must be complemented by improvements in service responsiveness, reliability, and personalization. Originality/value: This study bridges traditional service quality models with digital retail strategies, providing theoretical and practical insights into how digital engagement and perceived service quality collectively shape customer loyalty in today’s omnichannel retail landscape.