More than one in three tobacco retailers have considered reducing staff or even closing as a result of the trade in smuggled and counterfeit products.
Research by the Retailers Against Smuggling pressure group says 36% of retailers had considered reducing staff and 38% had considered closing their business after losing revenue to illegal tobacco suppliers. The survey also reveals that 37% of retailers had themselves been offered smuggled goods or knew of someone who had.
A spokeswoman for the group said: "For some retailers, the threat of the illegal tobacco trade is greater than that posed by big supermarkets. Not only do they lose out on tobacco sales, but also the loss of customers reduces sales of other goods to the point that many small shops are cutting back staff and, in some cases, facing closure. The problem is so acute that one in five shopkeepers is considering closing as a result."
Leicester retailer Ken Patel added: "This is having a very harmful effect on small businesses like mine and many face closure. It's a shame because we are an important part of our communities and many people depend on their local shop.
"You can buy a packet of 20 cigarettes in Latvia for 50p and sell them in the UK for £3. That's a lot of profit to be made by this form of criminal activity. The public need to realise that by buying these goods they are funding more serious crime, and that they are breaking the law when they purchase illegal cigarettes." He added that the UK's high duty on tobacco made it a prime market for cigarette smugglers.
Ken added: "The government raised taxes on cigarettes to force people to quit, but they have not stopped smoking - they just look for a cheaper source for cigarettes instead."
The survey revealed that 91% of respondents thought the government should do more to help retailers affected by smuggling, and that 71% feel the way to combat the problem would be to reduce or freeze duty.