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The purpose of this paper is to introduce the concept of robust design in retail service literature.

Using a Taguchi design comprising of inner L₈ (2⁷) and outer 2² arrays, a discrete choice task was designed for 233 students respond to. Signal‐to‐noise (S/N) ratio was used to test design robustness.

Negative effects of uncontrollable design factors on service choice were minimized through the use of inner and outer Taguchi arrays. The single composite measure of consumer choice called S/N ratio accounted both for mean and variance of choice probabilities.

Use of student sample was a major limitation. Also, the interaction between design factors was not tested as it required the use of more complicated designs.

This method can be used to improve design robustness by minimizing the impact of uncontrollable noise factors. Use of S/N ratio can help to select the design that simultaneously maximized the choice probabilities and minimized performance variation.

The paper makes important methodological and operational contributions to the retail service design literature. First, the concept of controllable and uncontrollable factors in choice‐based designs is introduced. Second, the use of S/N ratio as a single, composite measure of design robustness was incorporated. Operationally, this study highlights the impact of less‐studied concepts of wayfinding and customer incompatibility on satisfaction of retail customers.

The purpose of this paper is to explore the antecedents of customers' reactions to incompatibility and to develop operational guidelines for managers.

Using fractional factorial design six individual level factors are manipulated using video‐based scenarios.

The research finds that mood, expectations, and perceived control over outcome are the three most important factors influencing perception of incompatibility. Value system, control over process, and involvement effect perceived incompatibility to a lesser extent.

The model tested cannot be considered as complete. Some of the factors that may have an impact on incompatibility such as educational level of respondent and cost of the service were not included in the experiment because of the increasing response burden on the respondents.

For services managers, results highlight the importance of perceived control and prior expectation of incompatibility in managing incompatibility. Co‐creation of service, development of realistic advertising messages, and mood manipulation whenever possible, have been indicated as possible solutions. For academics, this research provides greater insights into the relative importance of individual level antecedents of customer incompatibility. Results also show that mood has both direct and indirect (via interactions with perception of control and involvement) effects on creation of incompatibility perceptions.

Results are of value to both service managers and academics. This paper extends research in the area of customer‐to‐customer interactions by empirically examining non‐demographic individual level factors that impact the perception of incompatibility (negative interpersonal encounters among customers).