The retail sector has changed a lot over the decades. Now that networks are everywhere, keeping customer data safe is as important as selling good products and building a strong brand. E-commerce, POS (point of sale) systems, and mobile payments have evolved, and so have cyber threats. At the same time, customers expect more. They want quick and easy shopping and also expect their data to be fully protected. This article looks at why cybersecurity is so important for retail, how threats have changed, and the best ways to protect modern retail businesses.
In recent years, the global e-commerce market has rapidly expanded. According to estimates from Statista, global online retail sales have reached approximately $5.8 trillion, with an expected growth of around 39% over the next few years. By 2027, this figure is predicted to surpass $8 trillion, making digital transactions the core of retail.
This massive transaction volume makes e-commerce platforms an attractive target for attackers. Hackers are using techniques such as SQL injection, cross-site scripting, and password spraying attacks to infiltrate e-commerce sites and retailers' systems to steal data.
These security breaches can affect far more than just customer credit card information. Employee personal data, inventory management details, and interconnected systems within the supply chain may also be compromised. As digitalization continues, it is inevitable that the retail industry will remain vulnerable to such cyber threats. Therefore, the need for robust security measures is more critical than ever.
For retailers, cybersecurity is crucial from both the customer and business perspectives. Shoppers need to trust that their personal information, like credit card details and email addresses, is safe. If retailers fail to protect this data, they face significant financial and reputational damage. Cybersecurity in retail isn't just an add-on; it's a fundamental part of modern commerce.
Customers are used to the convenience of online and omnichannel shopping, but convenience alone isn't enough. The risk of data leaks or rumors of privacy breaches causes major concern. When a retailer has a data breach, it’s not just personal information that’s compromised; it erodes trust in the entire brand. Negative news about data theft or unauthorized access can drive away long-time customers and potential new ones, who will likely look for more secure alternatives.
Customers may not understand the technical details of hacking, but they react quickly when they feel their data is at risk. A lack of technical knowledge can even increase their anxiety. Just one major public attack can spread fear on social media, causing existing customers to rethink their loyalty. Even small breaches can unexpectedly damage a brand's reputation. Brand image often depends on trust, so once trust is lost, it can take a long time and a lot of money to regain it. According to Vercara Research, 75% of U.S.consumers would stop purchasing from a brand if it suffered a cyber incident.
Insufficient cybersecurity measures can lead to serious financial and legal risks. Financial losses include costs for notifying affected customers, providing credit monitoring services, conducting forensic investigations, and fixing vulnerabilities. These costs can increase further if regulatory fines are imposed, which often happens when businesses violate data privacy laws or fail to comply with industry standards like PCI DSS.
Additionally, retailers may face class-action lawsuits if they are found negligent in their cybersecurity. For example, in June 2024, Rite Aid, a major U.S. drugstore chain, experienced a data breach by hackers that exposed approximately 2.2 million customer records. Rite Aid settled the class-action lawsuit resulting from this breach for $6.8 million.
The global expansion of retail has also accelerated the evolution of cyber threats. Some brands operate across multiple countries, handling real-time transactions and dealing with various data privacy laws and currency conversions. While this offers great sales opportunities, it also attracts criminals from all over the world. Some attackers are based in regions where law enforcement isn't very effective, while others are sophisticated criminal organizations that work together internationally. Multinational retailers are often targeted because, if successful, attackers can get large amounts of credit card information and personal data.
In recent years, new attack methods, particularly advanced AI-powered phishing, have gained attention in the retail industry. AI-powered phishing uses sophisticated language models to create convincing messages that appear to be from trusted colleagues or business partners. This can lead retail employees to unknowingly give away login credentials or download malware.
Additionally, malware that infiltrates POS systems can remain undetected for long periods, secretly collecting and exfiltrating customer payment information. For instance, Pepco, a Polish retail company, suffered an estimated €15.5 million loss in 2024 due to a severe phishing attack. Irene Coyle, COO of OSP Cyber Academy, speculates that this incident was caused by business email compromise (BEC) using generative AI. According to Coyle, the use of AI makes fraudulent emails more natural and persuasive than ever, making them harder for recipients to detect. She warns that this technological advancement is further increasing security risks for businesses.
Meanwhile, attacks targeting e-commerce checkout screens using botnets are also observed, attempting numerous account takeovers and test credit card transactions. These large-scale attacks are often a prelude to further misuse of acquired data, with attackers using the information to escalate to more sophisticated tactics.
As reliance on digital technology grows, various points within a retailer's ecosystem can become entry points for cybercriminals. Among these, POS (Point of Sale) systems and payment gateways are often Achilles' heels in traditional retail settings. In physical stores, POS terminals handle most payment data. If these terminals use outdated software or lack proper security patches, criminals can steal financial information in real time.
For example, a major incident involved the infection of POS terminals in Target's U.S. stores, leading to the exposure of approximately 40 million credit and debit card records. Because POS terminals are essential for daily operations, there's often a reluctance to temporarily shut them down for updates or security checks, creating opportunities for attackers. It's critical to encrypt payment data end-to-end, from capture to processing, but many companies still haven't implemented this.
Modern e-commerce platforms heavily rely on various network integrations, such as plugins, payment gateways, and external services, for enhanced functionality. While convenient, these integrations can become weak points if the code quality is low or if updates are not regularly applied. Injection attacks on shopping cart systems and CMS (Content Management Systems) are typical examples. Attackers embed malicious code into the site's backend, redirecting users to fake payment pages or secretly stealing information.
Furthermore, if the APIs used for data exchange with external services have insufficient security, systems may be accessed externally without proper authentication or data validation. For instance, the website of the major online retailer Newegg suffered a Magecart attack, where skimming code was embedded in its payment page. Customer credit card information was stolen for approximately one month.
Supply chain interdependencies are another often-overlooked area of risk. Modern retail businesses work closely with vendors, logistics partners, and distribution centers. If a partner's system within the supply chain has weaknesses, it can become an entry point for attackers to breach the retailer's own network (known as a supply chain attack). Even if a retailer's infrastructure is strong, it won't matter if software updates from a delivery company or a trusted vendor are tampered with. To address these issues, it's crucial to adopt a zero-trust architecture to strictly separate systems and set clear requirements for third-party risk assessments and data handover.
Retailers need to pay attention not only to vulnerabilities in their own software and hardware but also to those hidden within their relationships with third parties. Proactive efforts are essential, from protecting POS terminals and preventing skimming to rigorously testing e-commerce plugins to eliminate vulnerabilities. By directly addressing these high-risk areas, the likelihood of preventing significant breaches greatly increases. If you're interested in supply chain security, please also see our article, "7 Key Supply Chain Security Best Practices."
When considering cybersecurity in the retail industry, the numbers clearly show the current situation. According to Trustwave's 2020 Global Security Report, 24% of all cyberattacks targeted the retail industry, which is higher than any other sector. Many reports also state that hacking attempts on retail systems occur daily, or even multiple times a day. While not all attempts are successful, the sheer number of attempts strongly suggests that the retail industry is constantly facing threats. Common breach methods include stolen credentials, phishing attacks, and poorly secured remote access settings.
Large-scale breaches that make headlines often capture public attention. While small to medium-sized incidents may not become global news, they can frequently deal a devastating blow to the affected retail business, sometimes leading to bankruptcy. The damage can range from website defacement to sophisticated intrusions where large amounts of personal and credit card information are leaked, sometimes undetected for months.
Looking at major retail breach incidents like Rite Aid and Pepco, similar patterns emerge. In many cases, attackers exploit a combination of factors: weak password management, outdated software, and human error. The root causes are often insufficient patching, misconfigurations, and employees clicking on malicious links. The resulting impacts vary, from financial losses and legal action to damaged customer trust and, in some cases, the departure of top executives.
It's crucial to note that retailers, regardless of their size, are targets. Large global chains are attractive for their vast data, while smaller retailers are often seen as "easy targets" due to weaker security. Ultimately, it's a matter of "when," not "if," a retailer will face a cyber incident, and the key is how prepared they are. Stakeholders, from customers to shareholders, expect companies to learn from industry-wide breaches and take action. If you're interested in an overview of cybersecurity for small and medium-sized businesses, please see this guide.
It’s too late to think about cybersecurity after an attack happens. To stay ahead of ever-evolving threats, a proactive, rather than reactive, approach is essential. Building a future-ready security framework requires focusing on people, technology, and process optimization. The goal is to establish a multi-layered defense that minimizes the risk of breaches while ensuring rapid detection and response if an incident occurs.
Many cyberattacks start with phishing emails. If employees receive clever emails and unknowingly click links or give away login details, attackers can easily get in. That's why regular training, simulated phishing exercises, and always-available resources are crucial, not just a one-time orientation. The main goal is to create a culture where every employee feels responsible for security. When the whole organization is careful, social engineering attacks become much less successful. If you're interested in employee security training, please read our guide, "Build a Human Firewall."
From a technical standpoint, the Zero Trust model is gaining traction. In Zero Trust, all devices, users, and connections are considered potentially risky until verified, and access is managed in segments. By continuously authenticating and confirming access requests, this model prevents intruders from spreading laterally if a breach occurs. Multi-factor authentication (MFA) is also crucial. This stops simple passwords from being used to log into critical systems, such as POS and e-commerce administration panels.
Encrypting payment and customer data, both in transit and at rest, is also essential. Even if data is intercepted or accessed without authorization, encryption ensures attackers cannot obtain meaningful information. For more details on the importance of Zero Trust and basic security measures, please refer to our expert interview article, "Ransomware and Remote Work: Evolving Threats and Solutions."
From a process standpoint, it's crucial to establish a system for conducting regular risk assessments and vulnerability scans. This can be done in-house or by leveraging external experts. The goal is to check system patch status, identify misconfigurations, and pinpoint known vulnerabilities against the latest security requirements. It's also vital to keep incident response procedures up-to-date. Regularly performing tabletop exercises (simulated response drills) helps the entire organization understand the flow from isolating infected systems and investigating causes to reporting to stakeholders and restoring operations.
Vendor management processes are another critical element. Retailers often outsource many key functions, such as payment gateways, cloud services, and logistics platforms. Therefore, it's necessary to clearly define security protocols, data management procedures, and scopes of responsibility in contracts, and conduct audits as needed. As described above, a multi-faceted approach—combining employee awareness, technical defenses, and established processes—forms the foundation of robust security.
Furthermore, given the constantly evolving cyber threats in the retail industry, security measures must be reviewed regularly. Only by updating defenses in line with evolving threats can companies proactively address new loopholes before attackers exploit them. For evaluations of your company's security posture against external attacks by experts, please consider using our Penetration Testing or Security Gap Analysis services.
In the retail industry, user experience (UX) is critical. If checkout is cumbersome or confusing, customers will quickly abandon their carts or leave the store. Balancing a smooth purchasing experience with strong data protection is challenging. Still, retailers who achieve this can build a reputation for being "safe and user-friendly," increasing repeat customers and improving word-of-mouth.
To achieve secure yet intuitive checkout, retailers must minimize the steps customers take to complete a purchase while embedding necessary security measures. Too many security protocols or overly complex operations can cause users to disengage. A well-designed process, however, seamlessly integrates fraud detection, tokenization (tokenizing payment information), and risk-based authentication in the background, allowing legitimate users to proceed smoothly while blocking suspicious transactions.
Clearly communicating these implemented measures to customers also helps build trust. Messages like "All transactions on this site are encrypted" or "We use multi-factor authentication for login," along with trust marks displayed during checkout, are simple yet effective ways to show a commitment to data protection.
Implementing cybersecurity might feel daunting for companies without a dedicated team. However, for retailers to build a strong defense system over time, it’s crucial to approach it with both short-term and long-term efforts. It's important to create a balanced plan, understanding that perfect security is always a moving target.
The first step is to tackle "quick wins" that can significantly reduce immediate risks. Regularly applying software and system patches and updates is one of the most fundamental and effective measures. Many attacks exploit known vulnerabilities, and a considerable number of these could have been prevented simply by applying patches.
Additionally, conducting phishing awareness training for all employees can significantly contribute to risk reduction. Furthermore, auditing third-party plugins and integration tools to identify and remove neglected ones can by itself reduce attack vectors. Even these efforts alone can sometimes rapidly improve overall security levels without requiring massive budgets or new technologies.
Long-term initiatives require organizational transformation. Key steps include conducting annual or semi-annual security audits to measure the effectiveness and compliance of security controls. Some companies may opt to cultivate and deploy a dedicated in-house security team, while others may outsource to an MSSP (Managed Security Service Provider) for 24/7 monitoring, threat hunting, and incident response. The choice depends on company size, budget, and operational complexity.
Companies might also invest in advanced tools like next-generation firewalls, EDR (Endpoint Detection and Response), and even deception technology (mechanisms to lure attackers and facilitate early detection). Some businesses set ambitious, long-term roadmaps, such as redesigning their entire network to a Zero Trust model. However, these initiatives demand significant time and resources, making careful planning essential.
Aligning these investments with business objectives can elevate security beyond an IT-only concern, fostering collaboration across management and other departments. For instance, if a company plans global e-commerce expansion, it should simultaneously strengthen infrastructure security, implementing multi-factor authentication and fraud detection systems. Similarly, if expanding into new business lines requires contracting with unfamiliar suppliers, robust vendor risk management should be established beforehand. Tying security directly to concrete business goals helps the company understand the value of these investments.
Furthermore, regularly reporting security metrics and progress to management is effective. Sharing achievements like "a decrease in phishing email click-through rates" or "completion of integration with a new threat intelligence platform" demonstrates tangible progress and helps maintain motivation. For more detailed planning methods and budgeting considerations, please refer to our [Comprehensive Guide to a Cybersecurity Strategy Roadmap for the Retail Industry].
Cyberattacks are no longer exceptions but everyday risks. A strong security posture can do more than just protect your business from lawsuits and reputational damage; it can become a key differentiator. By consistently demonstrating a serious commitment to data protection, you can assure customers that your business is safe.
There’s no need to use complex jargon to achieve this. Simply and clearly communicate how you store data, secure payments, and respond quickly to suspicious activity. For instance, clearly state on your website that "All payments on our site are end-to-end encrypted" or "We require an extra verification step for login." Small efforts like these can create a big sense of security. This ongoing transparency builds trust, leading to positive word-of-mouth and attracting more customers who feel safe shopping with you.
A secure foundation also allows your business to expand with confidence. You can enter new markets or introduce the latest payment options without fearing major breach risks. For regulators and industry partners, businesses with strong security measures are seen as professional and trustworthy. In short, cybersecurity isn't just a defense; it's a critical competitive edge that supports your retail business in both protection and growth.
Overall, cybersecurity in the retail industry has shifted from an optional add-on to an essential requirement for modern commerce. Businesses that directly address this challenge can protect their operations and customers, and confidently move forward. Let’s transform cybersecurity—once often seen as a cost—into a defining strength, building strong stakeholder trust and achieving sustainable growth.