g significant headwinds in the months ahead, with rising interest rates and cost-of-living pressures dragging on consumer confidence. Household savings that were bolstered by government Covid-19 payments have started to fall and there are early indications of financial stress with buy-now-pay-later services and credit applications. A National Bank report indicates consumers are switching brands for services, cancelling or reducing spending commitments and even deliberately missing mortgage or other bill payments. Credit bureau Equifax reports applications for credit cards grew 31.5 per cent in the three months to September, compared with the same period in 2021. While a Christmas splurge is not totally out of the question, consumers are certain to become more cautious and curb discretionary spending with concerns about inflation and further interest rate rises. Retail sales growth has been relatively flat for the past 12 months, with the official figures from the Australian Bureau of Statistics indicating month-on-month growth of just 0.6 per cent for August and September., The September result was up 17.9 per cent on the same month in 2021 when Covid lockdowns were heavily influencing spending patterns and volumes. An Australia Post online shopping e-commerce update cites an 8.3 per cent drop in month-on-month sales from August to September and a 28 per cent decline year on year. The figures indicate a fall in sales in all categories as consumers became able to return to in-store purchasing. The Australia Post report also indicates 67 per cent of consumers expected to spend about the same amount as last year. In line with that report, industry associations are optimistic that the retail sales growth trend of the past nine months will continue and gain momentum in the Christmas trading period. But there have been two interest rate rises since September and warnings from the Reserve Bank of more to come. The online sales outlook Online sales are a key part of the equation, accounting for more than 20 per cent of total sales for some retailers, including JB Hi-Fi, Premier Retail and Myer. With the contraction of store networks over the past five years and the impetus of the Covid lockdowns, retailers have become more reliant on growth in online sales. And, as expected, online retail growth has declined against 2020 and 2021 levels, though it remains significantly above pre-Covid sales in 2019. Australia Post reports 5.4 million households were buying online each month last year, reaching a 19.3 percent share of total retail sales. But this has been followed by a fall in the number of households purchasing online. Yet Australia Post is still forecasting online retail sales could potentially reach around $120 billion within five years – double the highwater mark of last year. November sales this year will provide an indication of the short-term growth prospects for online retailing.  Obviously, consumers facing financial stress from cost-of-living pressures and the interest rate rises could dent online sales, albeit the search for lower prices on goods and services might provide a counterbalance. The cyber threat More problematic for online sales growth could be consumer trust. In the early days of online sales, retailers had to secure consumer confidence about price, quality, delivery and returns for unsuitable products. Those concerns could now be replaced by worries about privacy and the possibility of their personal data and identification being hacked. The headline Optus and Medibank cyber-security breaches have affected millions of consumers and will have forced them to think about their vulnerability and the possible exposure of their personal data. The Australian Cyber Security Centre reports the number of cyber attacks increased by 13 per cent last financial year, to more than 70,000 – likely a low estimate due to lack of reporting requirements.  The federal government is set to introduce legislation to force companies to improve data security and to be more prudent about what they keep. Heavy fines are being discussed for data breaches but punitive action is unlikely to stem the cyber security attacks which can be highly sophisticated. Retailers have some serious thinking to do about the protection of the data they keep, how much customer information they need to retain and whether or not they should share any customer data with other organisations. Financial penalties are one thing. Reputational and relationship damage is far more significant.