Official figures show retail sales were flat in October after two months of growth, despite the Reserve Bank cutting interest rates that month.
The Bureau of Statistics numbers show turnover was steady at $21.6 billion in October on a seasonally adjusted basis, after rising in August and September, bringing the annual rate of sales growth down to 3.1 per cent.
The result was lower than anticipated - economists had expected a rise of 0.4 per cent.
Food retailing was the only sector to see better conditions, with sales up 0.9 per cent, and the ABS says this category has seen the strongest performance, rising every month this year.
The largest decline came in sales of household goods, which fell 1.6 per cent.
JP Morgan economist Tom Kennedy says the figures should concern traditional retailers, as they highlight consumers' increasing preference to spend their money on services rather than in the shops.
"Discretionary retail sales have performed poorly over the past year, with the annual run rate slowing to 1.7 per cent on year average," Mr Kennedy said.
"To put this in perspective, the average 2007 pre-crisis growth rate for consumer discretionary spending was 7.8 per cent on year average, highlighting the shift in preferences over the past five years toward saving and services consumption.
"These structural changes appear likely to remain a drag on traditional retail over the next few years." The figures continue to highlight the mixed nature of Australia's economy - retail sales were strongest in the mining states of Western Australia (up 0.9 per cent) and the Northern Territory (up 1.5 per cent), with smaller gains in Queensland and New South Wales.
But turnover went backwards in Victoria, South Australia and Tasmania, with the steepest fall in the ACT, where sales decreased by 2.2 per cent.
There are hopes that sales could pick up for the crucial pre-Christmas shopping season - last month, figures from Westpac showed consumer confidence had jumped to its highest level in more than a year and a half.
The Australian National Retailers Association has joined its counterpart, the Australian Retailers' Association, in tipping a better Christmas this year, forecasting that Australians will boost their spending to $32 billion this season, or more than $1,400 each.
The Australian dollar slipped after the retail sales figures were released and at 12:35pm (AEDT) was trading at 104.07 US cents.