Irish retailers are getting edgy - and with reason. The euro is hurtling towards them at alarming speed and there's no chance of escape. The new currency is set to transform everything in its sight and shopkeepers take the top spot on the target list.

As we enter a long winter of euro preparation, spare a thought for the local corner shop. Chances are that the first consumer purchases to be made after January 1st will be of the small, run-of-the-mill variety: a pint of milk or a restorative orange juice to help address last night's hangover.

It's all easy enough for the buyer, who just enters the shop with pounds and leaves with the change in euros. To make that smooth transaction happen, however, a huge weight of responsibility is falling on the shoulders of the retail sector.

In true tiger-economy style, it has been decided that the Republic's citizens should "spend" their way into the euro, with most of the changeover scheduled to occur through retail cash transactions.

By buying in pounds and receiving your change in euros, the former is taken out of circulation and acceptance of the latter is made easier. However, this model is wholly dependent on the retail sector for its success.

Coinciding as it does with the Christmas rush and January sales, it falls at a time of year when retailers are already under considerable time and staff pressures.

"The business community is picking up the entire bill for the changeover," says Mr Pat Delaney, director of the Small Firms Association (SFA). "The consumer is not paying anything and the Government isn't paying a lot either."

The SFA has estimated that the cost of the changeover to Irish business will be around £800 million (€1.02 billion). According to Mr Delaney, this outlay will be divided between staff and software costs. Retailers, he says, are carrying "a tremendous burden" in ensuring that the changeover goes to plan. "The most significant cost will be in the training of staff. They want their customers to be happy and need their staff to be fully literate with the euro, in case mistakes are made. Training is not going to be cheap."

Mr Delaney estimates that the cost of training could run as high as £250 per person. However, this figure runs contrary to the price of training for members of the Retail Grocery Dairy and Allied Traders Association (RGDATA), which is providing training at a subsidised cost of £22.50 for its members.

This difference is important because training costs could arguably lead some retailers to raise prices in an attempt to offset an exceptional euro-induced outlay.

A survey recently conducted by Checkout magazine shows that almost 65 per cent of the Republic's retailers expect the euro to introduce "significant" costs to their operations, while a further 18 per cent foresee "major" costs. Although more than half expect the long-term effect on their business to be minimal, the same proportion predict that the euro will cause retail prices to increase.

Anecdotal evidence would suggest that price rises are already under way, as some retailers introduce euro price points and adjust pound prices accordingly. The extent of any price rises will be difficult to quantify, but euro inflation is clearly a possibility. This has been recognised by the Director of Consumer Affairs, Ms Carmel Foley, who has encouraged retailers to sign up to a code of practice on the euro changeover, which commits them to a range of dual-pricing measures from last Monday.

The only glitch is that the code of practice is voluntary and traders who do not sign the code are free to proceed with the changeover as they wish. Even if a signed up trader breaks the code, the gravest sanction they will face is being "named and shamed" by Ms Foley's office.

The Consumers Association has also acknowledged the threat of price inflation but, again, is reasonably powerless in addressing it.

Mr Dermott Jewell, the Consumer Association's chief executive, acknowledges the position of retailers, saying it was naive to suggest they would not experience difficulties with the changeover.

His association has even gone so far as to suggest tax relief for various aspects of the changeover's implications, a notion that has also been raised by the SFA. Mr Jewell's understanding does not, however, extend as far as suggesting that price increases might be justified by euro costs.

"The extra costs for retailers are not going to be for an undetermined period," he says.

A larger problem could arise from retailers using an abridged conversion rate of 0.78, rather than the full 0.787564 that the Consumers Association would like to see used. Although this inaccurate pricing would work in favour of the consumer, Mr Jewell's association is due to begin a conversion rate awareness campaign in coming weeks.

Both Mr Delaney and Ms Ailish Forde, director general of RGDATA, are keen to dispel rumours of euro inflation, at least among their members.

According to Ms Forde, "a lot of folklore has been circulated" in this regard, while Mr Delaney suggests that the changeover could even lead to a price war between supermarkets as consumers become more price aware.

The "spend" strategy also raises security concerns for small retailers, according to Ms Forde. She points to the storage of extra currency that will be required in the initial changeover period.

Although smaller shops will be the last to be "frontloaded" with the new notes and coins, they will still be in possession of larger amounts of cash than usual, at least for a period.

This leads to insurance questions: will the shop's normal insurance cover this extra storage and if not, what will the additional costs be? According to Ms Forde, her association is in discussions with the Irish Insurance Federation about this issue and a deal should be brokered soon.

The majority of RGDATA's 4,000 members will conduct the changeover through existing till points, as opposed to the foreign exchange desks that have been mooted. Much of the association's training has focused on the one-till model and simulations have worked well, says Ms Forde.

She says some retailers may invest in new software or hardware they do not necessarily require to implement the changeover.

Education from both RGDATA and Forfβs will, she hopes, minimise such outlay and reduce its effect on consumers. Whatever happens, she says, "for those first few weeks, it's not going to be like normal shopping".