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This exploratory study investigates the nature of customer evaluations of their service encounters in a retail chain departmental store setting in Victoria, Australia. The focus of the study is to understand how a customer perceives positive and negative encounters with regard to shopping at the retail chain. To accomplish these objectives, data were gathered by means of focus group interviews with customers of four retail stores. These customers were asked to recall positive and negative critical incidents with regard to their shopping experiences at the retail store. The results showed that positive critical incidents foster customer satisfaction, customer loyalty, and repurchase intentions, while negative critical incidents affected customer behaviour and led to customer complaints, reduced willingness to patronise the retail firm, and to the spread of negative word‐of‐mouth behaviour. Using this and additional information …