European Journal of Social Sciences – Volume 16, Number 2 (2010) 231 Service Quality (Servqual) and its Effect on Customer Satisfaction in Retailing C.N. Krishna Naik Head & Chairman, Board of Studies, Sri Krishna Devaraya Institute of Management Sri Krishna Devaraya University, Anantapur, Andhra Pradesh, India E-mail: profkrishnanaik@gmail.com Swapna Bhargavi Gantasala Assistant Professor, Aurora’s P.G. College Ramanthapur, Hyderabad E-mail: sappusunnyankith@gmail.com Gantasala V. Prabhakar Director of Experiential Education & Assistant Professor School of Management, New York Institute of Technology Sixth circle - Zahran Street, P.O. Box 840878 Amman 11184 Jordan E-mail: prabhakar.venu@gmail.com Abstract Service Quality within retail units is pivotal for satisfying customers, retaining them and creating loyalty amongst customers. This research uses SERVQUAL to analyze the gap between perceptions and expectations of the customer, concerning with the service at retail units in the South Indian state of Andhra Pradesh. Customer Satisfaction level is assessed for the services offered at select retail units in the city of Hyderabad. Five dimensions in service quality (servqual), tangibility, reliability, responsiveness, empathy, and assurance (Parasuraman, Zeithaml, &Berry, 1985) have been considered for this empirical research. General purpose of this research to know some factors that impact customer satisfaction. The purpose are (1) to describe applied of service quality (servqual) dimension in retail Business (2) to know service quality (servqual) dimensions that make customers satisfied, and (3) to know service quality (servqual) dimensions that are dominant in influencing customer satisfaction. The research methodology was carried out in a survey cross- sectional applied to 369 respondents. The data obtained was analyzed by using reliability method, correlation and regression. Result of research showed that services offered by retail units have positive impact and are significant in building customer satisfaction. Findings of this empirical research reiterate the point of view that Service Quality dimensions are crucial for customer satisfaction in retailing – a burgeoning sector with high growth potential and opportunities in fast growing economies like India’s. Keywords: Service Quality (Servqual) Dimensions, Customer Satisfaction Introduction - Measures of Service Quality Measuring service quality is difficult due to its unique characteristics: Intangibility, heterogeneity, inseparability and perishability (Bateson, 1995). Service quality is linked to the concepts of perceptions