Almost one in ten corner shops (9%) is under threat due to lost sales resulting from tobacco smuggling and cross-border shopping, according to a survey.
Researchers for the Tobacco Retailers Alliance also found that one in four shops (26%) have considered reducing staff numbers for the same reason.
High tax rates on tobacco have been blamed for the numbers, as Scotland and the UK are among the most profitable "hotspots" for smugglers.
Geoff Barrett, a Glasgow retailer and the Scottish National Spokeswoman for the Tobacco Retailers Alliance, said: "These results are very worrying for independent retailers like me and demonstrate that tobacco smuggling is so prevalent, it is threatening the existence of a part of the fabric of our communities that so many people rely on.
"The UK is such a hotspot for smuggling because the high tax on tobacco makes it one of the most profitable places in the world for criminals to carry out their trade.
"The Government needs to allow tax levels in other countries in Europe to catch up and come more in to line with the UK so that there is not such a huge financial temptation for smugglers to focus their activities here."
Robbie Mortali, a Dundee retailer and a member of the Tobacco Retailers Alliance, said proposals to force tobacco companies to market their wares in plain packaging would only compound the problem.
He said "If the Government introduces the plain packaging of tobacco, this would play in to the hands of smugglers as they will no longer have to spend time and money copying the complex variety of branding currently present across the range of tobacco products.
"That will mean more profit for the smugglers which will be channelled into underworld activities such as people trafficking and prostitution. In addition, more sales for the smugglers means lost sales for legitimate retailers like me."
A recent poll found that 86% of serving police officers in the UK said plain packaging would increase tobacco smuggling.
The Government received around 500,000 responses against the proposal for plain packaging in its recently closed consultation on the subject.