Here are my thoughts:
1) Yes, absolutely you should ask clarifying questions to get a better idea on how to approach the question. But once you have enough info, do the following.
2) Make a broad MECE structure laying out the factors you will consider when thinking about opening an appliance store. For e.g.:
1. Market Attractiveness
1.1 Market sizing
1.2 Market growth
1.4 Our offering vs what our customer's want
2. Financial factors
2.1 Initial investment
2.2 Annual revenue estimate (from market sizing above)
2.3 Annual costs estimate
2.4 NPV/PBP/ROI etc
3. Operational factors
3.1 Where will I have staff available?
3.2 Proximity to suppliers/customers
3.3 Transportation costs vs Rent [trade off between non-premium and premium locations]
4. Strategic factors
4.1 Which geographies would I want to be strong in, or have a flagship showroom in?
4.2 What is our company's 5 year plan? Is it to grow as many stores as possible? Is it to start franchising? etc
This should give the interviewer enough material to point you in the right direction of the case.
Hope this helps!
Feel free to reach out to me via chat if you have any specific questions :)