Global retail is expanding rapidly. McKinsey & Company’s 2022 report highlighted that one-fifth of all companies in the European Union belong to the retail sector, meeting a significant portion of total household consumption needs and generating an annual revenue of EUR $7 trillion. Similarly, in the United States, the National Retail Federation indicates that the retail sector provides jobs for 1 in 4 Americans, with 52 million individuals employed in the industry.
With this growth comes an increase in omnichannel experiences, where brick-and-mortar stores are complemented by online shopping options. This shift toward “cashless” transactions, including debit, credit, and mobile payments, is gaining momentum, with global transactions expected to surpass USD 505 billion by 2032.
However, expansion also exposes retailers to greater cybersecurity risks. As retailers collect vast amounts of personal and financial data, they become prime targets for cyberattacks. The 2007 TJX Companies breach, which affected 45.7 million credit and debit card accounts, serves as a stark example of the damage cybercriminals can inflict.
What kind of data is at risk?
Deloitte analysis indicates that the most commonly targeted data in cyberattacks includes cardholder data, personal data, and intellectual property. As retailers expand, their use of big data and complex data warehousing models becomes more prevalent. Even traditionally brick-and-mortar industries, such as healthcare and pharmaceutical retailers, are increasingly offering digital services, leading to the storage of highly sensitive patient information.
Furthermore, databases containing customer details and strategic information, such as upcoming store sites and demographic insights, are vulnerable to attacks. The Equifax data breach in 2017 and the Marriott International cyberattack in 2018 exposed the vulnerability of companies to cyber threats, affecting millions of individuals worldwide.
How is stolen data used?
Stolen data can be easily purchased on the dark web and used for various fraudulent activities, including identity theft and phishing scams. Cybercriminals often use stolen credit card information to make fraudulent purchases or to launch phishing attacks, where they impersonate reputable retailers to deceive customers into revealing sensitive information.
Business impact on retailers
Data breaches have significant financial and reputational implications for retailers. Apart from the costs associated with remediation and legal settlements, data breaches can severely damage a company’s reputation and stock value. For example, Target Corporation faced a data breach in 2013 that compromised the data of 70 million customers, resulting in substantial financial losses, lawsuits, and a decline in stock price.
Ultimately, cyberattacks can erode consumer trust and affect a retailer’s bottom line, underscoring the critical importance of robust cybersecurity measures in the retail industry.
Emerging Threats in Retail: Points of Entry to Watch
- Cloud Services and IoT: While cloud services and IoT offer significant benefits to retailers, they also introduce new vulnerabilities. As more data moves to the cloud, ensuring its security becomes paramount.
- E-commerce and Mobile Payment Systems: The rise of e-commerce and mobile payments has made shopping centers prime targets for cyberattacks. Criminals exploit methods like POS skimming and malware to steal credit card data.
- Third-Party Vendors and Partners: Retailers rely heavily on third-party vendors for critical functions like marketing and payment processing. However, this reliance can open doors for cybercriminals to access sensitive data.
- Employee Threats: Insider threats often go unnoticed in the retail sector, especially with high turnover rates. Seasonal and short-term employees with system access can pose security risks.
- Complex Supply Chains: Cybercriminals target weaknesses in supply chains to launch attacks. With limited oversight and control over supply chains, vendors face increasing security challenges.
- New Technologies: Retailers are adopting innovative technologies like facial recognition and augmented reality to enhance customer experiences. However, these technologies also present new security risks that cybercriminals can exploit.
In Conclusion:
As the retail industry evolves to meet changing consumer demands, safeguarding data integrity is crucial. Identity theft and phishing scams remain significant threats, highlighting the importance of robust cybersecurity measures. With the expansion of omnichannel experiences, retailers must prioritize comprehensive cybersecurity planning to ensure financial security and maintain customer trust.