This research investigates the impact of the servicescape on the responses of both the customer and the employee within a retail grocery setting and is exploratory in nature. The paper has its theoretical underpinning in servicescape theory (Bitner, 1992; Homburg and Stock, 2004), physical work environment literature (Davis, 1984; Kuenzi and Schminke, 2009) and the Service Profit Chain (SPC) (Heskett et al., 1994). Interviews with grocery retail store managers were carried out to contextualise the paper though the main research instrument is a large-scale survey of customers and employees. The findings suggest that almost 50 per cent of customer satisfaction is explained by the dimensions of service employee quality and this has important implications for retail managers. The findings also highlight that employee servicescape factors affect employee satisfaction, which in turn impacts employee loyalty. These, alongside other key findings, are presented and discussed. Directions for future research are also highlighted.