Secretary for Commerce and Economic Development, Algernon Yau, on Wednesday urged the retail sector to enhance its efforts in maintaining its competitiveness.

Delivering his speech at the Hong Kong Retail Summit, organised by the Hong Kong Retail Management Association, Yau said economic activity in the city had returned to normal and tourist numbers were growing.

However, Yau said the retail sector still faced various challenges.

"We must also confront the various new challenges facing the retail industry, as the preferences and behaviour patterns of tourists - and Hongkongers - are changing," he explained.

"Retailers must keep pace with these changes, continuously innovate, and adjust their operational strategies in order to maintain their competitiveness and advantage in an ever-changing market environment."

Speaking to reporters at the summit, the chairwoman of the city’s retail management association, Annie Yau-Tse, said the retail performance in both the tourist and local markets had been disappointing.

"We [have been seeing] the trend of [budget travel] since last year. That's why we see that the tourists are actually focusing on enjoying their time in Hong Kong, like taking photos, but not really buying," she said.

"This trend is actually really affecting our industry, because in the past we have been making a lot of business out of the tourists who are actually coming for shopping. But nowadays, you don't really see too many people carrying their suitcases for shopping."

Yau-Tse said retailers in Hong Kong should leverage technologies, such as big data and artificial intelligence, to understand consumer patterns better and create tailored promotion plans to adapt to the changing market dynamics.