High wages bills and energy costs have created a "cost-of-trading crisis," the retail lobby warns as it urges the federal government to provide relief for businesses.
The National Retail Association released a report on Monday outlining the key concerns of the nation's businesses owners for trading conditions and sales growth.
Wage costs, energy costs and insurance premiums were cited as the three biggest constraints on business success by retailers.
Almost half of the survey participants expect performance to be worse than last year.
More than half expect to record a decline in year-on-year profits in the next 12 months.
National Retail Association Director Rob Godwin says the economic conditions have pushed retailers into a "cost-of-trading crisis".
"The May budget gives the federal government the opportunity to address skyrocketing energy and insurance premiums and take excess pressure off Australian businesses, the lifeblood of our economy," he said.
"Unless these cost-of-trading issues that are driving higher prices are addressed urgently, the government can't possibly hope to make any inroads on the cost of living."
Mr Godwin sounded the alarm on regional and rural businesses which were struggling with inflated transport and logistics costs.
The government needed to address the high transportation costs and the increased complexity of supply chains by providing funding to support those businesses, he said.
Almost one in three retailers have cut advertising costs and reduced spending on customer acquisition and retention, according to the report.
"If retailers are worried about their futures, concerns are certain to flow through to hiring and investment decisions, and that's bad news for the entire Australian economy," Mr Godwin said.
