The benchmark S&P/ASX200 index was down 106.9 points, or 1.49 per cent, to 7,312 at noon AEDT on Thursday, while the broader All Ordinaries had dropped 114.2 points, or 1.54 per cent, to 7,312.4.
Target Australia owner Wesfarmers dropped 6.2 per cent to a one-and-a-half year low of $46.69, JB Hi-Fi was down 6.5 per cent to a five-month low of $44.98 and Harvey Norman had dropped 5.9 per cent to a nearly two-year low of $4.31.
Rebel Sport and Supercheap Auto and Macpac owner Super Retail Group dropped by 5.8 per cent to a one-year low, Myer was down by 3.5 per cent to a two-month low and City Chic Collective had dropped by 6.5 per cent.
Even consumer staples stocks were battered, with Woolworths falling by 5.9 per cent to a two-month low of $35.27 and Coles down 3.9 per cent to $17.74.
"Consumer spending stocks have been beaten with an ugly stick," Saxo Markets Australian market analyst Jessica Amir told AAP.
In the US, Target Corp's shares on the New York Stock Exchange fell by 25 per cent to a nearly 52-week low after the national retailer missed its profit expectations by wide margins, a day after Walmart did likewise. Both cited rising fuel costs, higher inventory and inflationary pressures.
The two companies were much bigger than Australian retailers, Ms Amir noted. "The margin of what is happening is huge."
On Wall Street, the US S&P 500 fell four per cent to end at 3,925.18 points, while the Nasdaq Composite lost 4.69 per cent to 11,423.03 and the Dow Jones Industrial Average fell 3.52 per cent to 31,506.48.
The Australian dollar was buying 69.69 US cents at noon, down from 70.12 US cents at Wednesday's close.