Multiplex retailers versus wholesalers: A test of the total value of purchasing model

Globally a new wave of retailers are threatening the viability of many wholesalers, especially smaller more vulnerable wholesale distributors, as these new wave retailers aggressively compete for the business customer. To better understand this new form of competition, a theoretical model is developed from the organizational buyer behavior literature to explain the relative patronage preferences of business customers for wholesale‐distributors as a supply source versus two types of multiplex retailers ‐ warehouse home centers and office supply superstores. The model, previously untested in the business‐to‐business literature, postulates that business buyers select supply sources based on a “total value of purchasing” criterion. The total value is a function of price and the perceived costs associated with credit services, product‐acquisition services, and risk‐reduction services. The model is empirically tested in both an office supply superstore and warehouse home center setting with survey research conducted in six cities in the USA. Substantial empirical support, with the exception of the credit component, is obtained for the model.