Once highly vibrant, the retail sector of Hong Kong, China has experienced more moderate growth in recent years amid both cyclical shocks and structural changes. This analytical note examines the key drivers of the sector using empirical analysis. The findings show that inbound tourism and real wages have a positive and statistically significant impact on retail sales, reflecting the importance of external demand and household purchasing power. In contrast, Hong Kong dollar appreciation, rising inflation, and outbound tourism weigh on retail activity, highlighting sensitivities to currency competitiveness, living costs, and spending leakage. These dynamics underscore the need for adaptive policies to strengthen the sector’s resilience and sustainability.