Retreating is more appropriate for a tactical type wargame, with factors like morale and suppression. There are dozens of these and many of them are better than AxA in many ways.
Like a lot of people allude to here, the attacker in AxA doesn’t really retreat, he stops “pressing the attack” as we like to say. There are all sorts of variations where this withdraw rule allows (usually the Germans or Russians because of their land territory) to move units extra spaces, or consolidate units during combat. Of course, whenever you use this rule this way, you will have left enemy pieces behind and that leaves an opening for planes to land and tanks to blitz through your line.
We’ve been going over rules like this a lot lately, I think in the scope of AxA they give the attacker several subtle advantages. The attacker already has the predominating advantage; that of choosing where to attack, when, and with how much. These other advantages don’t amount to nearly as much as the initiative does. These advantages are important to ensuring that the momentum of the game is always in favor of the players who have the greatest weight of power and focus regionally (this simulates real life blitzkrieg, encirclement, and strategic war and in some ways, chess) and that the game doesn’t end up a stack slog like Risk can.
When we talk about a Strategic retreat, that actually happens on the (to be) defending player’s turn. You don’t retreat from combat; you withdraw to a reserve position before combat ever occurs. Its the same with “bringing up reserves”, these units don’t join the battle during combat (say after multiple turns), they reinforce from the rear during the players noncom or appear from the factories. There are plenty of examples (abandoning an untenable city like Ukraine, Leningrad, Moscow etc) where these happen every game.