Retail ranks among the top five industries most vulnerable to cybersecurity attacks, and the stakes have never been higher. Today’s cybercriminals aren’t just after credit card numbers; they’re targeting sensitive personal data and the massive cash flows coursing through e-commerce businesses. From compromised customer data and drained bank accounts to hefty regulatory fines and lasting reputational damage, a single attack can bring your thriving e-commerce business to its knees. Your best offense is a rock-solid defense. Below, you’ll learn about the latest retail cybersecurity statistics, common threats, retail cybersecurity challenges and how to address them, and the best solutions for protecting your business from cyberattacks.
1. Trends and Stats Showing the State of Retail Cybersecurity
Cybercrime is expected to cost the world $9.5 trillion in 2024, surpassing the national economies of every country except the US and China. Today, the average data breach costs around $4.88 million, with retailers being prime targets, accounting for about a quarter of cybercrimes aimed at the industry. Notably, nearly half of all traffic to retail sites isn’t even human. During the period from 2021 to 2022, around 40% of retail traffic was generated by bots—automated programs that can scrape customer data, test stolen credentials, or even crash a site.
It’s not just the big firms that are at risk; 43% of all cyberattacks target small businesses, more than 60% of which are forced to close within six months of a breach. Retail owners face the prospect of losing data, reputation, money, and even their entire business due to retail cybersecurity attacks. Understanding these trends is essential for creating effective cybersecurity strategies that can protect e-commerce operations from evolving threats.
2. What Are the Most Common Retail Cybersecurity Threats Today?
Credential phishing attacks are one of the leading forms of social engineering that exploit human error rather than network weaknesses. Criminals use fake emails, texts, or calls to pose as trusted people or brands, tricking victims into sharing data, clicking malicious links, or downloading malware. With the stolen data, criminals can commit identity theft, credit card fraud, or account takeovers. This type of attack represented 43% of all attacks in 2023, compared to 35% in 2022, according to Cybersource’s 2023 Global Ecommerce Payments and Fraud Report.
Malware infiltration and data theft are also critical issues. Malware like Trojans and viruses can gain access to and steal sensitive customer data, often infiltrating retail systems through third-party software downloads or phishing emails. Point-of-sale (POS) systems are particularly vulnerable. For instance, in 2013, malware infiltrated Target’s POS system and stole over 40 million debit and credit card numbers, leading to an $18.5 million settlement claim.
3. Ransomware Encryption and Demands
Ransomware attacks have become a significant threat across various industries, including retail. Criminals encrypt company data and demand ransom payments for decryption, forcing businesses to choose between paying up or facing prolonged operational disruptions. In 2023, 69% of retail companies faced ransomware attacks, with 71% of attackers successfully encrypting data. Unfortunately, only 26% of these companies managed to stop the attacks before encryption occurred. The average loss for businesses that chose to pay the ransom was about $46,000, underscoring the financial burden of these cyber threats.
Distributed Denial of Service (DDoS) attacks aim to create service disruptions by flooding websites with overwhelming traffic using botnets. This can lead to significant downtime and revenue loss for retail businesses, as buyers find themselves unable to access the site. During such attacks, almost half of a retail website’s traffic typically comes from bad bots and malicious automation. In e-commerce, the infamous Grinch bot is notorious for hoarding inventory during the holiday shopping season, preventing legitimate customers from purchasing popular items online.
4. Web Application Vulnerabilities for Data Theft
Cybercriminals frequently exploit weaknesses in e-commerce platforms to steal customer information through tactics like malicious code injection, database query manipulation, or cookie tampering. Retailers face ongoing risks as approximately 65% of these stolen credentials are sold to criminal forums within a day of collection. Consequently, both customer and employee information is consistently at risk, and a successful data breach can significantly damage a business’s reputation. Implementing robust security measures is crucial to safeguard sensitive data and build customer trust.
Social engineering manipulation encompasses several tactics designed to trick company insiders into revealing sensitive information or providing network access. Techniques like spear phishing (targeted phishing attacks) and whaling (phishing aimed at top executives) can be highly effective. Business email compromise (BEC), a severe form of social engineering, can lead to a median loss of around $50,000, illustrating the financial impact of these manipulative tactics.
5. Supply Chain Software Vulnerabilities
Supply chain attacks present a substantial risk because they can target multiple retailers simultaneously through a single supplier by exploiting vulnerabilities in third-party software. E-commerce companies often rely on third-party services for payment processing, supply chain management, and customer support, which creates potential weak points. These attacks grew by 742% between 2019 and 2022, highlighting the urgent need for enhanced supply chain security measures to protect retail businesses from widespread threats.
Data leaks occur when sensitive information is exposed to unauthorized parties, frequently due to security gaps or human error. This issue is particularly prevalent in the retail sector, which ranks third in data leak susceptibility. Concerningly, 82% of buyers say they’ll stop online engagement with brands following a data breach. Common causes of retail data breaches include weak cybersecurity practices, poorly secured credentials, human errors, and third-party vulnerabilities. Therefore, proactive measures are essential to prevent data leaks and maintain customer trust.
6. Retail Cybersecurity Challenges and How to Overcome Them
Retailers face numerous cybersecurity challenges, but addressing them with targeted strategies can provide robust protection. For instance, securing sensitive data is crucial for preventing exploitation by cybercriminals. Encrypting sensitive information and utilizing data loss prevention (DLP) software to monitor and control data transfers can significantly enhance data security. Additionally, training employees on data breach prevention and cybersecurity best practices tailored to the retail industry can reduce human error, which is a major factor in data breaches.
The cybersecurity skill gap poses another significant challenge. The global cybersecurity workforce is short by about four million professionals, and the gap is expected to widen. This shortage impacts the e-commerce sector, making it challenging to protect buyer data and secure operations. To counteract this, investing in quality upskilling programs for existing IT staff, employing AI-powered security tools to complement human capabilities, and supporting employees in obtaining relevant certifications can help mitigate the skill gap. Providing competitive compensation and encouraging diversity in hiring also attract more talent to the cybersecurity field.
7. Web Application Attacks
Web application attacks exploit weaknesses in e-commerce websites, content management systems, and customer portals. Around 34% of web application and API attacks target commerce, including retail. More than 70% of vulnerabilities stem from flaws in web application coding, while others arise from outdated legacy systems, insecure third-party JavaScript, and overly lenient network access. To protect against these attacks, implementing secure coding practices and regular code reviews, keeping all software updated and patched, and limiting third-party JavaScript usage are essential measures.
Insider threats are risks posed by individuals within an organization, such as employees, contractors, or partners. These threats can be either malicious or negligent. Detecting insider threats is challenging because these individuals have legal access to company systems and data. Traditional security tools like firewalls are often ineffective against insider threats. In 2022, the average cost to address insider threats increased by 62% year-on-year, reaching $16.56 million. Regular risk assessments of employee access rights, strict access controls, and a zero-trust security model are vital for mitigating insider threats.
8. IoT Devices
The use of Internet of Things (IoT) devices in retail introduces additional cybersecurity risks. IoT devices, such as point-of-sale systems, inventory trackers, security cameras, digital signage, smart shelves, and RFID tags, can be exploited by cybercriminals. Approximately 57% of IoT devices are susceptible to moderate or high-severity attacks. Ensuring regular software and firmware updates, implementing strong authentication methods and access controls, and separating IoT devices from critical business systems through network segmentation are crucial steps in securing these devices.
E-commerce fraud remains a significant concern, resulting in substantial financial losses. In 2023, e-commerce fraud resulted in around $48 billion in annual losses, with companies losing 2.9% of their revenues. Common types of e-commerce fraud include account takeover (ATO), chargeback fraud, payment fraud, and interception fraud. Educating customers about fraud tactics, carrying out card and identity verification checks, and using AI-powered fraud detection systems can help combat e-commerce fraud. Implementing multifactor authentication, 3D Secure (3DS) authentication, and payment tokenization add extra layers of security to transactions.
9. Recent Retail Data Breaches
Notable recent retail data breaches underscore the importance of robust cybersecurity measures. For instance, clothing retailer Forever 21 experienced a data breach between January and March 2023, affecting over half a million past and current employees. An unauthorized third party gained access to sensitive information, including names, Social Security numbers, and bank account details. Forever 21 offered victims one year of free fraud and identity theft protection, and assured that the stolen data was erased after the breach.
Luxury department store Neiman Marcus reported a data breach in May 2024, part of a larger incident involving cloud storage company Snowflake. The breach exposed customer names, contact information, birthdays, and gift card numbers. Payment card PINs were not compromised. Hackers demanded ransom, and when refused, reportedly sold the database. This incident affected over 31 million customers and highlights the recurring nature of data breaches in the retail sector.
10. Best Retail Cybersecurity Solutions
The retail industry is among the top five sectors most susceptible to cybersecurity threats, and the risks have never been greater. Modern cybercriminals are no longer content with stealing just credit card information; they are now after sensitive personal data and the significant cash flows in e-commerce businesses. The ramifications of a cyberattack can be devastating: from compromised customer data and emptied bank accounts to substantial regulatory fines and severe reputational harm. A single breach can cripple a flourishing e-commerce business.
To protect your business, a robust cybersecurity defense is essential. This article aims to provide insights into the latest statistics on retail cybersecurity, identify common threats, discuss the specific challenges faced by the retail sector, and offer strategies to address these challenges effectively. Understanding these elements is crucial in preventing attacks and mitigating their impact if they do occur.
Educating employees on cybersecurity practices, implementing advanced security technologies, and regularly updating security protocols are some measures that can fortify your defense. Additionally, investing in cybersecurity insurance and partnering with experts can provide an extra layer of protection.
In the rapidly evolving landscape of cyber threats, staying informed and proactive is key to safeguarding your business from potential attacks.
