The drop exceeded expectations. Following a 1.7 percent drop on an annual basis in February, economists expected the contraction to increase to 1.9 percent.
In the European Union, a 27-member block that includes the eurozone, retail sales were down 1.6 percent March to March.
Compared to February, sales were down 0.1 percent in the euozone and 0.2 percent in the EU.
Among countries included in the report, Latvia posted the highest annual sales gain at 8.8 percent.
No other country was close. The second largest gain was in Lithuania with sales up 4.5 percent. In Sweden, sales rose 3 percent on an annual basis.
The largest declines were in Spain, with retail off 10.5 percent, and in Slovenia, where sales were off 7.7 percent. In Portugal, retail sales fell 5.9 percent, Eurostat said.