The Interaction of Product Quality and Service in Forming Customer Loyalty through Purchasing Decisions: The Case of Warung 99, Malang

This study examines the influence of product quality and service quality on purchasing decisions and customer loyalty at the retail store “Warung 99”, and evaluates the mediating role of purchasing decisions. Primary data were obtained through a structured questionnaire distributed to 320 active customers, then analyzed with Partial Least Squares Structural Equation Modeling (PLS -SEM) using SmartPLS 4.0 with a bootstrapping procedure (5,000 resamples) to test path coefficients, t statistics, and -significance values. The results show that product quality has a positive and significant effect on purchasing decisions (β = 0.461, t = 3.017, p = 0.001) and directly affects customer loyalty (β = 0.263, t = 2.159, p = 0.015). Service quality also has a positive and significant effect on purchasing decisions (β = 0.396, t = 2.560, p = 0.005), but does not have a significant direct effect on loyalty (β = 0.052, t = 0.398, p = 0.345). Purchasing decisions strongly predict loyalty (β = 0.613, t = 6.415, p < 0.001). Mediation analysis revealed significant indirect effects of product quality (β = 0.283, t = 2.441, p = 0.007) and service quality (β = 0.243, t = 2.530, p = 0.006) on loyalty through purchasing decisions. The coefficient of determination (R²) reached 0.687 for purchasing decisions and 0.783 for loyalty, indicating that the model was able to explain -68.7% and 78.3% of the variance of the dependent variable, respectively. These findings emphasize the importance of improving product and service quality to stimulate purchasing decisions, which in turn strengthen customer loyalty, providing practical implications for warung managers in their efforts to improve retention and long-term profitability