Final answer:
The performance of high-performing retail stores is driven by factors including effective production models, strategic site selection based on models like the Huff and Hotelling Model, and firm reputation that encourages customer loyalty and word-of-mouth promotion.
Step-by-step explanation:
Drivers for the good performance of high-performing stores often include elements such as an effective production model, efficient cost structure, strategic site location, focus on customer satisfaction, and management of firm reputation. A company like Amazon, for instance, has been successful in part due to its ability to undercut the competitors' prices while still including the cost of shipping, which has everything to do with its innovative production model and streamlined cost structure. At the heart of location strategy for retail, concepts like the Huff Model and the Hotelling Model play a significant role.
The Huff Model suggests that successful stores are generally larger, offer highly desirable goods, and face less competition, thus attracting more customers. Hotelling's theory posits that customers prefer to minimize distance traveled for shopping, encouraging businesses to agglomerate in strategic locations that maximize customer potential. These models help to understand the competitive landscape and drive decisions about where to open new stores. Moreover, the reputation of a firm is crucial for attracting repeat customers who are key for word-of-mouth recommendations. Stores with a good reputation, as demonstrated through consistent quality and service, can command higher prices and maintain customer loyalty in comparison to less-established competitors.