MORE independent shops closed in Welsh towns and cities such as Swansea in the second half of last year than any other region across the UK.
The latest figures from the Local Data Company show the independent sector shrank by 3.3 per cent across Wales as a whole.
The sector grew by two per cent in Scotland.
Dai Davies, development manager for the South Wales region for the Federation of Small Businesses in Wales, said: "These figures are extremely worrying, and together with recent figures on high vacancy rates in Wales, show the challenge facing our local businesses on the high street.
"Governments on a national and local level need to use the tools at their disposal to breathe life back into our town centres.
"FSB Wales believes that allowing local authorities to retain a proportion of business rate revenue would create an incentive to boost local economies and to this end we continue to call for the full devolution of business rates to Wales.
"Independent shops had been traditionally filling the void when some of the big retail chains went under so it is concerning to see that the second half of 2012 saw the first negative change since 2010.
"Small entrepreneurs want to thrive and grow and it's the job of government, on a local and national level to create as favourable a business environment as possible to encourage them to do that."
Swansea Business Improvement District (Bid) chief executive Russell Greenslade said: "Over the period mentioned about 15 independent businesses have opened in the city centre as well as several new office-based businesses in Alexander House and on Princess Way.
"We'll continue to work with other organisations in recruiting new and developing businesses into the city centre to make the area a better place to do business."
A spokesman for Swansea Council said: "Mystery shopping surveys last year found Swansea city centre to be the third best in the UK for independent traders.
"There are more than 200 independent traders in the city centre based in areas like Swansea Market, Lower Oxford Street, High Street, Castle Street and Singleton Street.
"A business called Once Upon a Cupcake has recently moved to bigger premises on Plymouth Street and a restaurant called Madeira has just opened on The Kingsway.
"We work closely alongside partners like the Swansea Bid and the Welsh Government to make the trading environment as welcoming as possible for both traders and shoppers."