How should I model a new or expanded retail establishment?
Because retail trade essentially purchases all of its intermediate goods from outside the region (unless your region is very large), and does very little regarding the modification of products, and simply presents a front for selling them, any kind of retail trade study should use the mark-up portion of sales only, no total sales, as the input into firm sales, retail trade in the model. In other words, you should not include the cost of the goods being sold in your policy variable inputs. Otherwise you run the risk of grossly overestimating the benefits of new retail business.
