The era of intense competition in all spheres of the global economy has forced companies to spare no effort to retain their market share and to compete successfully in the marketplace. This is particularly evident in the retail sector which is one of the fastest growing and most competitive sectors of the Croatian economy. Over the last decade, retailers have faced many challenges. On the one hand, there are ever more sophisticated and more demanding customers. On the other hand, there is intense competition in retailing: non-store retail formats, vertical integration, large store formats, to name a few. It requires retailers worldwide to define the manner in which they may differentiate themselves in the market and attract consumers in a way that is superior to their competitors. Although most retailers today use an overall cost leadership strategy to obtain a competitive advantage, thus reducing the personal element in service delivery, services remain critical for the competitiveness of a retail firm. The main objective of this paper is to investigate the influence of service level on store patronage. The paper reports the findings of a study conducted on a sample of 350 Croatian customers and points out the positive relation between customer service and retail firm success.