The third quarter was another bad period for Australia's retail industry, except for online sellers, as supermarkets and department stores recorded declining sales.

Data from the Australian Bureau of Statistics said that share of department stores in total retail spending dipped further to 7.5 per cent in the last three months to September. The stores that reported weaker sales include Target and Big W, while David Jones and Myer have issued profit warnings.

However, the Westfield Group reported a mixed sales performance in the third quarter. While its Australian operations logged a 1.7 per cent sales drop, New Zealand sales improved by 0.8 per cent, U.K. sales slightly went up 0.1 per cent but U.S sales for the past 12 months rose 5.6 per cent.

While supermarkets still enjoyed the largest share at 32.7 per cent, it was still a substantial contraction from 10 years ago when supermarkets accounted for 37.2 percent of total retail spending.

Electricals and pharmaceuticals enjoyed a boost in share with the former upping its market share to 7.8 per cent from 4 per cent and the latter boosting share to 5.8 per cent from 4.1 per cent.

The reduction in department store share from 8.4 per cent in 2001 is a clear signal for the department stores to constantly reinvent itself in the future to stay competitive and relevant amid the changing retail landscape, particularly with the growing influence of online stores, said CommSec chief economist Craig James.

Commonwealth Bank retail sector analyst Andrew McLennan said the decline of Australian department store sales is a reflection of global trends. However, Australian Retailers' Association Executive Director Russell Zimmerman pointed out that department stores are battling the sales decline by coming out with strong house-brand sales.

"I don't think the department store is dead by a long stretch," Mr Zimmerman told the Herald Sun.

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