Workers' annual holiday entitlement could rise to 28 days under government proposals.
Currently, some retailers have insisted staff take the eight annual bank holidays as part of their 20 days' annual leave. The DTI wants to change this so bank holidays are treated as separate paid leave.
Shop workers' union Usdaw said the move would help retail staff "enjoy a work/life balance that other workers take for granted", but some shop owners fear it will increase costs.
Bill Chada, owner of Supersave Wines in Bournemouth, said: "Everything is being pushed on to small shopkeepers at the moment so we can't afford any more staff. To give employees extra time off means we'll have to cover them, so we will end up getting rid of staff."
Samantha Jackson recently opened Scatchards, a wine merchants in Chester. She said she would be put off employing full-time staff as the business expands if the proposals get the go-ahead.
She said: "I'm always the last person to get paid, so to pay someone else holiday would be tough. I think I'd be inclined to go on with part-time staff."
Drinks stores are being backed by the Association of Convenience Stores, which is asking the government to look at the effect the changes would have on small businesses. ACS spokesman Shane Brennan said: "It does increase the cost to business and there is a big concern that holiday increases for employees will mean longer hours for people who own the shops. All the legislation puts a ≠burden on small businesses and what doesn't seem to be taken into account is the ≠collective impact these new laws have on the owners."
Changes would be made in two stages, rising from 20 to 24 days on Oct 1 2007 and from 24 to 28 days on Oct 1 2008. The DTI is carrying out a consultation on the proposals, due to close on April 13.
Some 6 million workers will benefit from extra holiday entitlement if changes are made. The DTI estimates the cost to businesses to be around £4 billion per year, while the cost of absenteeism in the workplace is estimated to be about £11.6 billion a year.