The Effect of Cafe Atmosphere on Purchase Decision: Empirical Evidence from Generation Z in Indonesia

Abstract

In Indonesia, coffee shops, commonly called warung or kedai shops, have begun to appear amid society from remote villages to urban centers. Therefore, the purpose of this study is to examine the effect of cafe atmosphere (i.e., exterior, interior, interior point-of-purchase displays and store layout) on the purchase decision of Generation Z. This study is conducted because of cafe competition is currently overgrowing. This study model consisted of five variables: exterior, interior, interior point-of-purchase displays, store layout, and purchase decision. Sampling in this study used non-probability, with a purposive sampling technique. According to predetermined criteria, the data collection technique employed a questionnaire distributed online to consumers had visited a cafe at least once in the last three months. This study's sample was 137 cafe visitors in Yogyakarta, representing one of the big cities in Indonesia. Therefore, the data was analyzed by using multiple regression. The results of the study indicated that the exterior and interior had a positive and significant effect on purchasing decision. Likewise, interior point-of-purchase displays and store layout positively and significantly affected purchase decision. In addition, this study's findings generally concluded that the cafe atmosphere had a positive and significant effect on purchase decision.

1.Introduction

In Indonesia, a coffee shop is usually called warung or kedai shop. Coffee shops are starting to appear in our midst, from remote villages to urban centers. According to Wiktionary in Kurniawan (2011) a coffee shop can be defined as a small cafe or small restaurant, which usually sells coffee and sometimes non-alcoholic drinks, simple food, or snacks, with supporting facilities in that place. In line with Wiktionary, the meaning of a coffee shop itself in the Indonesian dictionary by Poerwadarminta which quoted by Zaini, Qomariah, and Santoso (2020) is “a place that sells coffee and other types of drinks, as well as snacks at low prices.”

Businesspeople must prepare strategies to please consumers and build consumer enthusiasm into an experience in consuming products and services to impress them. Therefore, a paradigm is needed to shift a traditional thought in the foodservice business category, especially restaurants, which previously only provided a menu of dishes (food and drinks), into a modern concept that offers an unforgettable experience. One of the ways to win the competition is to make something different. Store atmosphere can be an alternative to differentiate one restaurant from another. This phenomenon motivates cafe entrepreneurs to think critically, provides creative cafe concepts, and attracts consumers to visit, one of which is by creating a cafe atmosphere.

The difference is necessary because it is sure to find similar products with slightly different prices and even the same in every business. Store atmosphere can be more reasons for consumers to be interested and choose where they will visit and buy. It is as stated by Levy, Weitz, Grewal, and Madore (2004) that “customer purchasing behavior is also influenced by the shop atmosphere”. In a consumer purchasing interest, it responds not only to the goods and services offered but also to a pleasant purchasing environment for consumers.

According to Levy et al. (2004), “atmosphere refers to the design of the environment through visual communication, lighting, color, music, and smells, which stimulate customers perceptually and emotionally, and ultimately, influence their purchasing behavior.” It can be assumed that the consumer’s assessments or responses to the store atmosphere will influence consumer interest. One of the considerations for someone’s purchasing interest is an attractive store atmosphere.

The store atmosphere is an essential physical characteristic for businesspeople. It acts as the creation of a comfortable atmosphere in accordance with what consumers want so that they want to linger in a restaurant, which indirectly stimulates them to make purchases. A consumer’s purchasing interest is obtained from a learning process and a thought process that forms a perception. This perception must be stimulated so that there is pressure to manifest it in the form of purchasing action immediately. The store atmosphere is a combination of emotional things. According to Mowen and Minor (2008), the store atmosphere affects the emotional state of the shopper, which then encourages to increase or decrease shopping. The impact of a store atmosphere can create the impression that a buyer will increase his purchases or buy only in moderation and possibly no longer intend to return to purchase at the store.

The cafe atmosphere has a vital role because the environment (all the physical surroundings and objects formed) can influence consumer behavior (Wikström, Lennstrand, & Persson, 2005). The existence of a cafe atmosphere can attract consumers to visit the cafe only to take photos of their products or the cafe’s unique concept and upload them on social media accounts (Instagram, Facebook, or TikTok). In this way, the community also indirectly introduces the cafe’s existence. This “contemporary” style is practiced by the younger generation of Generation Z (Hutama, 2014).

Pratama (2012) explains the term Generation Z. Generation Z, or what is known as the digital generation, is a young generation that grows and develops with great dependence on digital technology. Generation Z tends to communicate and interact with many people in various circles, not only their peers, but also other people who are younger or even older through various social networking sites, such as Instagram, TikTok, Facebook, Twitter, Line, WhatsApp, and others. The high need for socialization among Generation Z consumers is the driving force for these consumers to be consumerists. When the newest products are found in a group, it will influence other Generation Z members to purchase products (Dharma, 2013).

2. Literature Review and Hypothesis Development

2.1. Store Atmosphere

Store atmosphere refers to environmental design through visual communication, lighting, color, music, and smells to stimulate customers’ perceptual and emotional responses and ultimately influence purchasing behavior. The use of the right store atmosphere will create an attractive impression and help improve the image of a store in customer perceptions, which, of course, will drive purchasing decisions (Levy et al., 2004).

According to Mowen and Minor (2008), a store atmosphere is an atmosphere created by marketers to provide a value of pleasure, joy, and satisfaction with the atmosphere created when making a purchase. A neat and attractive restaurant atmosphere will attract customers more than a restaurant set up just plain. However, a restaurant set up plain but clean is more attractive than a restaurant that is not arranged at all and looks dirty.

2.2. Store Atmosphere Elements

Store atmosphere has elements that influence the atmosphere the store wants to create. It is to attract consumer interest. According to Berman and Evans (2010) and applied by Hidayat, Fauzi Dh, and Nuralam (2018) in their research, the store atmosphere elements consist of the exterior, the general interior, store layout, and interior displays. The following is an explanation of each of these elements.

1. Exterior

The exterior characteristics have a strong influence on the store’s image, so it must be planned as well as possible. Combining these exteriors can make the outside of the shop look unique, attractive, stand out, and invite people to enter the store. These exterior elements consist of sub-elements, including the front of the shop, symbols, entrances, height and size of the building, and so on.

2. General Interior

There are various motives for consumers to enter a restaurant, and consumers want to make a pleasant impression. This impression can be created, for example, with an attractive restaurant wall color, the music being played, the aroma/smell, the available facilities, and so on.

3. Store Layout

It is a plan to determine the specific location and arrangement of the streets or alleys in the restaurant that are wide enough and easy for people to pass by, the layout of tables and chairs, the layout of tables for reservations and payments, and so on.

4. Interior Point-of-Purchase

Information display is very decisive for a restaurant atmosphere because it provides information to consumers. Its primary purpose is to increase sales and profits for the restaurant. Interior displays include posters, location signs, display of goods on special days such as Eid and New Year, and so on. Product display will increase the chance of unplanned purchases, and usually, this effect occurs in product categories that are relatively frequently purchased (Inman, Winer, & Ferraro, 2009).

2.3. Making Purchasing Decision

According to Kotler and Armstrong (2016), Kotler, Keller, Manceau, and Hemonnet-Goujot (2019), making purchasing decisions consists of five stages preceded by an introduction to a product, information search, evaluation, purchase decisions, and post-purchase. The five stages are not always passed by consumers as a whole because there are consumer behaviors that can directly pass certain stages.

1. Product Introduction

When entering the stage of introducing a product, consumers tend to become aware of what they need. Consumer awareness is triggered by the appearance of two signals: internal signals and external signals. Internal signals arise from a person’s regular needs, such as hunger and thirst, while external signals arise from the surrounding environment and the media, and in the end, these two signals will lead consumers to think about making a purchase (Kotler & Armstrong, 2016; Kotler et al., 2019).

2. Information Search

Huang and Benyoucef (2017) explain that in the information search stage, consumers will seek information about their needs to make the right choices in making purchases. Four sections are the primary source of information for consumers, according to Kotler et al. (2019), namely, personal, commercial, public, and experiential. Each source has a different role in influencing each consumer. Furthermore, consumers will compare any information they have obtained and then carry out the review process. The same point is stated by Yadav and Garg (2019) that reviewing information obtained from sources will make it easier for consumers to make decisions.

3. Evaluation

According to Huang and Benyoucef (2017), the evaluation stage in purchasing decision-making is when consumers review information or alternative products obtained, then determine the final decision to determine the best choice. When consumers are in the evaluation stage, they will carry out the process of evaluating a product consciously and rationally. The basic concept is required in carrying out this process. According to Kotler et al. (2019), there are three basic concepts to understand the consumer evaluation process: efforts to meet needs, search for certain benefits from the solutions offered, and see each product as a collection of attributes that have many benefits.

4. Purchase Decision

There are five considerations for consumers in carrying out the purchase process: brand, place of purchase, number of products, right time, and payment method (Kotler et al., 2019). The role of the environment greatly influences consumer behavior when considering these five factors (Le, Nguyen, & Pham, 2019; Sousa, Nobre, & Farhangmehr, 2018, 2019). The same thing is also affirmed by Kim (2006) that emotional and social values are essential keys to consumer behavior in the purchasing process. According to Huang and Benyoucef (2017), the purchasing stage is the activity of carrying out a purchase process to complete a transaction.

5. Post-Purchase

Post-purchase is the last stage in purchasing decision making. After carrying out the purchase process, in general, consumers will experience dissonance, where consumers will hear the benefits and advantages felt from other brands (Kotler & Armstrong, 2016; Kotler et al., 2019). The quality of a good store design must provide several features that support marketers to convince consumers who experience dissonance to develop consumer repurchase behavior.

2.4. The Relationship of the Atmosphere to the Purchasing Decision

The relationship between the atmosphere and the purchase decision is the relationship between the store environment and Generation Z consumers’ emotional state, influenced by certain personal and situational factors (Xu, 2007). A busy shop environment will increase shopping intent, but tends to reduce the in-store experience. It should be noted that a busy service environment will reduce consumer enjoyment. Given the negative effect of the in-store crowd on pleasure, the seller must control the crowd level when customer traffic is high by systematically managing the store layout. It is done to prevent customers from leaving the store. The environment atmosphere is an essential factor in the cafe business because in deciding to make a purchase, consumers not only respond to the goods and services offered but also provide an assessment of the purchasing environment created by the store (Dharma, 2013). Based on the literature review discussed previously, the research hypotheses and model proposed are as in Figure 1.

Figure 1: Research Framework

H1: The exterior has a positive and significant effect on purchase decision.

H2: Interior has a positive and significant effect on purchase decision.

H3: Interior point-of-purchase display has a positive and significant effect on purchase decision.

H4: Store layout has a positive and significant effect on purchase decision.

H5: Cafe atmosphere (i.e., exterior, interior, interior point-of-purchase display, and store layout) has a positive and significant effect on purchase decision.

3. Research Methods

This research applied a quantitative study using survey data collection techniques. Quantitative research was carried out based on data collected, processed, and presented into meaningful information for managerial and economic decision making (Kuncoro, 2011). Quantitative research tries to measure something appropriately (Cooper & Schindler, 2014).

The survey method is a measurement process used to gather information about events that have already occurred, with highly structured interviews with or without human interviewers (Cooper & Schindler, 2014). The purpose of the survey is to obtain data that can be compared across the selected sample to find similarities and differences (Cooper & Schindler, 2014).

The sample is part of the target population carefully selected to represent a population’s characteristics (Cooper & Schindler, 2014). In this research, sampling was carried out employing non-probability sampling, meaning that the researcher did not randomly select the samples in this study. The researcher used the purposive sampling technique to take research samples, in which samples were taken according to specific criteria to obtain samples that had the desired characteristics (Cooper & Schindler, 2014).

In this study, a sample of 137 respondents was obtained. The type of data used primary data, and the data were collected utilizing a questionnaire distributed online. In this study, the criteria for respondents were women and men aged 15–26 years, domiciled in Yogyakarta, and had visited at least once in the last three months. The time limit for the last three months was so that respondents’ answers could be appropriately presented and under current conditions.

The questionnaire used for this study consisted of three parts. The first part contained a brief introduction and researcher’s profile, which explained the research aims and objectives. The second part was about the respondent’s demographics, including gender, age, occupation, domicile, monthly expenses, and average nominal expenditure per transaction. The third part was about the variables of the exterior, interior, interior point-of-purchase display, store layout, and purchasing decisions. A message of gratitude for the availability of being a respondent in this study concludes the questionnaire.

Table 1: Measurements

4. Results and Discussion

According to the demographic characteristics results obtained from 137 respondents in this study, the number of male respondents (66.0 percent) was more than that of female respondents (34.0 percent). Most respondents were 20–25 years old (70%) and 15–20 years old (18 percent). Respondents in three months visited the cafe more than five times (65 percent), 3–4 times (28 percent), and 1–2 visits (7.0 percent). Respondents chose Coffee Room Ruang Kopi (38 percent), Space Coffee Roastery (26 percent), and Kebon Ndalem Coffee Roastery (15 percent).

4.1. Descriptive Statistics

Descriptive statistics were conducted to determine an overview of the research data regarding respondents’ answers to the questionnaire’s questions. The following is descriptive data from the variables used in this research.

Based on the statistical results in Table 2, it could be seen that all the variables in this study had a standard deviation value close to or above 0.5, so it could be concluded that the data obtained from respondents had varied data. It indicated that the respondents’ answers varied in the appropriate category (less than the mean value).

Table 2: Descriptive Statistics

4.2. Validity Test

Validity is used to determine items’ feasibility in a list (construct) of questions in defining a variable (Ghozali, 2013). This study used 137 respondents, with a value of df = 135 and a significance level for the two-way test of 0.05, then the r-table value was 0.1666.

The statement is said to be valid if the calculated R-value is higher than the r-table. Based on the results of variable test calculations in Table 3, it was known that all statement items in the questionnaire related to the exterior, interior, point of purchase displays, store layouts, and purchase decisions were valid. Thus, it could be concluded that the research questionnaire was valid and could be used as a research instrument.

Table 3: Validity Test

4.3. Reliability Test

Reliability is a necessary contributor to validity, but not sufficient for validity (Cooper & Schindler, 2014). A measure is reliable when the results are consistent over time. The questionnaire questions’ reliability can be measured by a reliability test, namely by seeing the respondents’ answer to these questions whether they are consistent or not over the times. A questionnaire is reliable if it provides a Cronbach’s Alpha value of > 0.60 (Ghozali, 2013). The reliability test was carried out with the SPSS measuring instrument.

Based on the data in Table 4, it was known that the reliability test results on the exterior variable were 0.801, the interior variable was 0.758, the interior point of purchase display variable was 0.859, the store layout variable was 0.833, and the purchasing decision variable was 0.880. Thus, the questionnaire used in this study could be said to be reliable and fit for use as a research instrument.

Table 4: Reliability Test

4.4. Hypothesis Testing

The hypothesis testing results related to the relationship between the variables of the exterior, interior, interior point of purchase display, store layout, and purchasing decisions can be seen in Table 5.

Table 5: Hypothesis Testing

This multiple regression model explained the effect of the variable exterior, interior, interior point-of-purchase display, store layout (independent) on purchasing decision variables (dependent). From the table, it could be seen that the R2 value was 0.613. It signified that the variables of the exterior, interior, interior point-of-purchase display, and store layout variables explained 61.3 percent of the purchasing decision variable, and other factors outside the model explained the other 38.7 percent. Based on Table 5, the analysis results of the variables of exterior, interior, interior point-of-purchase display, and store layout had a positive and significant effect on purchasing decisions (β_R= 0, 222; t_R = 2.710 p_R < 0.05; β_KT = 0.265; t_KT = 3.746; p_KT < 0.05; β_JI = 0.325; t_JI = 4.476; p_JI < 0.05; β_R= 0.284; t_R = 4.197 p_R < 0.05). The table displays that the F-count for purchasing decisions was 52.203, while the F-table value was 2.28. Based on these results, the F-count > F-table value and a significance value of 0.000 were obtained. The significance value revealed less than 0.000, so there was a significant effect of the independent variables on the dependent variable.

Based on the regression analysis results that had been carried out previously, the exterior had a significant positive effect on purchasing decisions. Referring to Table 5, this first hypothesis was supported because the β value was 0.222, and the significance value was 0.008. The significance value was smaller than 0.05, so the exterior had a significant positive effect on purchasing decisions.

According to Hidayat et al. (2018), the exterior characteristics have a strong influence on the store’s image, so it must be planned as well as possible. Combining these exteriors can make the outside of the shop look unique, attractive, stand out, and invite people to enter the store. These exterior elements consist of sub-elements, including the front of the shop, symbols, entrances, height and size of the building, and so on. A strong store image will increase customer purchasing decisions (Wang & Tsai, 2014).

Besides, based on the regression analysis results that had been done previously, the interior had a significant positive impact on purchasing decisions. Referring to Table 5, this second hypothesis was supported because it was based on a β value of 0.284 and a significance value of 0.000. The significance value showed that it was smaller than 0.05, then the interior had a significant positive effect on the purchasing decisions.

Consumers who come to the cafe should get a pleasant impression. This impression can be created, for example, with an attractive restaurant wall color, the music being played, the aroma/smell, the available facilities, and so on. According to Hidayat et al. (2018), providing convenience and facilities to consumers would increase purchasing decisions.

Moreover, the regression analysis results that had been conducted previously indicated that the interior point-of-purchase display significantly and positively affected purchasing decisions. Table 5 exhibits that this third hypothesis was supported because it was based on a β value of 0.265 and a significance value of 0.000. The significance value revealed less than 0.05. Thus, the interior point of purchase display had a significant positive influence on purchasing decisions.

According to Hidayat et al. (2018), information display is very decisive for a restaurant atmosphere because it provides consumers information. Its primary purpose is to increase sales and profits for the restaurant. Interior displays include posters, location signs, display of goods on special days such as Eid and New Year, an interesting photo spot, and a cafe icon. Posting information and enhancing the atmosphere, and giving the cafe uniqueness, such as photo spots, decorations, and unique images, will increase consumer appeal.

Additionally, the regression analysis results that had been performed previously showed that the store layout significantly influenced purchasing decisions. Referring to Table 5, this fourth hypothesis was supported because the β value was 0.325 and the significance value was 0.000. The significance value was less than 0.05, so the store layout significantly affected purchasing decisions.

According to Nofiawaty and Yuliandi (2013), store layout affected purchasing decisions. The store layout is an essential part of a cafe atmosphere because by doing the right store layout, an entrepreneur will get the expected consumer behavior. An attractive store layout will invite customers to come to the cafe when consumers see the cafe’s inside through the window or entrance. The right cafe arrangement will be able to invite consumers to stay longer and spend more money. Therefore, a cafe entrepreneur must be able to organize the cafe properly to achieve consumer goals.

Finally, based on the regression analysis results that had been done previously, it uncovered that the cafe atmosphere significantly and positively impacted purchasing decisions. Table 5 shows that this fifth hypothesis was supported because it was based on the results obtained from the F-count > F-table and the significance value of 0.000. The significance value exhibited less than 0.000. Hence, the cafe atmosphere (exterior, interior, interior point-of-purchase display, and store layout) had a significant positive effect on purchasing decisions.

The use of the right store atmosphere will create an attractive impression and help improve the image of a store in customer perceptions, which of course, will drive purchasing decisions. Furthermore, according to Berman and Evans (2010), creating and maintaining an image is very dependent on the atmosphere of the company or shop. Atmosphere refers to the physical characteristics of a store used to develop an image and to attract customers. In another case, according to Kotler and Armstrong (2016), Kotler et al. (2019), the shop atmosphere is a planned atmosphere according to the target market and can attract consumers to buy.

5. Conclusion

From the results and analysis carried out in this study, the author could draw several conclusions based on the influence of each independent variable on all dependent variables. The sample taken in this study was Generation Z, with an age range of 15–26 years, domiciled in Yogyakarta, and who had visited a cafe at least once in the last three months. The first conclusion was that the exterior had a significant positive effect on purchasing decisions. Furthermore, the interior had a significant positive influence on purchasing decisions. The third conclusion was that the interior point-of-purchase display significantly and positively impacted purchasing decisions. Fourth, store layout had a significant positive impact on purchasing decisions. Finally, the cafe atmosphere (exterior, interior, interior point of purchase display, and store layout) significantly and positively influenced purchasing decisions.

Based on the results of this study, it is expected that coffee shop entrepreneurs in Yogyakarta can consider strategies in developing a coffee shop atmosphere, which can be useful in attracting consumer attention. Creating a unique and viral atmosphere can be done to increase the selling value of the coffee shop. They can also maintain and improve the coffee shop’s quality so that customers are satisfied and still want to share their coffee shop experiences. It is where coffee shops are currently an attraction for young people, especially Generation Z. Coffee shops can create viral content on social media to strengthen customers’ desire to come and share their experiences. In order for customers to come to a coffee shop, a marketing strategy is needed, such as creating attractive social media content with attractive photo spots or holding a giveaway to attract attention and increase consumers.