Retailers say it is becoming harder to maintain pay relativities for staff with continued increases to minimum wage.
Prime Minister Chris Hipkins announced the minimum wage will go up by $1.50 an hour from 1 April.
The hike is in line with inflation but is still trailing the living wage of $23.65.
Retail NZ chief executive Greg Harford said retailers were disappointed about the move.
"Across the retail sector workers are, on average, already earning $26.65 an hour or north of that.
"The minimum wage is going to put extra pressure on that because employers will typically be trying to maintain relativities between senior staff and those who are less experienced and more junior".
Harford said if there was any year to pause the minimum wage hike, 2023 was the year to do it.
"There are going to be real world impacts from the decision to increase the minimum wage by such a large amount.
"Many small business owners out there don't even earn minimum wage themselves out of their own business".
A snap poll conducted by Retail NZ showed 69 percent of business owners would increase prices in response to the minimum wage hike, 57 percent would reduce the hours of work available to their teams and 41 percent were planning to reduce staff numbers.
Harford said the government had other ways to help resolve the cost of living crisis.
"It could look at the level of GST, which is a hidden cost on the value of everything we buy.
"It could also look to reducing to adjusting tax brackets to help people with the cost of living.
"It's really pretty unfair that the burden of the economic situation is falling on the private sector when it is employing people".