The clothing, footwear and accessories retail sector led the falls in August, declining by $304.4 million (15.7%), the Australian Bureau of Statistics (ABS) has revealed.
With NSW and Victoria in lockdowns through the month of August, retail trade in the fashion sector suffered.
Similarly, department stores also declined in August, slipping 10.2% ($141.8 million) in the month.
"Retail turnover continues to be negatively impacted by lockdown restrictions, with each of the eastern mainland states experiencing falls in line with their respective level of restrictions," ABS director of quarterly economy wide surveys Ben James said.
"In direct contrast, states with no lockdowns performed well with Western Australia and South Australia enjoying strong rises as physical stores were open for trade," he said.
A full month of lockdown saw New South Wales fall 3.5% to its lowest level since April 2020 when the pandemic first hit.
Meanwhile, Victoria fell 3% as the state was placed back into an ongoing lockdown on August 5.
Overall, Australian retail turnover declined 1.7% in August and was down 0.7% compared to August last year.
"The figures released by the ABS confirm what we already know in terms of the lockdowns and the devastating impact they have on consumer spending," Australian Retailers Association CEO Paul Zahra said.
"Small businesses have been left reeling in NSW, Victoria and the ACT.
"They’ve been smashed by Delta and the existing government support measures are barely keeping them going.
"In contrast, retail sales are more upbeat in states that have been spared the pain of lockdowns.
"The reopening plans announced by the NSW, Victorian and ACT Governments provide some hope that businesses will be able to recover some of the substantial trading losses they’ve suffered in recent months, but for many, the impacts have been too much, and some won’t reopen at all.
"Unfortunately, there’s little consistency across the three reopening plans, which means there are different trigger points for when businesses can get back up and running again.
"We continue to call for an earlier reopening of retail in Victoria and the ACT when 70% of their populations are fully vaccinated, like what has been announced in NSW.
"Christmas is the most important time of year on the retail calendar – it’s when most discretionary retailers make up to two thirds of their profits for the year, and it’s crucial that businesses are given every opportunity to reopen and trade at their full potential in line with COVID safety requirements," he said.