Australian retailers are feeling the pinch as hard-hit consumers spend their dwindling cash on entertainment rather than clothes.

Many clothing retailers are finding that their sales are 20 per cent down on last year, according to the Australian Retailers' Association.

Designer clothing has been hardest hit, with a shift towards casual clothes fuelled by an explosion in factory outlets.

One industry source said: It's the consumer spend for the dollar that we are fighting for. You've gone from 15 per cent of disposable income down to 4 per cent over the last 10 years."