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 ecommerce businesses.
The consequences are bad. From compromised customer data and drained bank accounts to hefty regulatory fines and lasting reputational damage, a single attack can bring your thriving ecommerce 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.
Trends and stats showing the state of retail cybersecurity
Cybercrime will cost the world $9.5 trillion in 2024. That figure is more than the national economies of every country in the world, with the exception of the US and China.
Today, the average data breach cost stands at $4.88 million. Retailers are prime targets, with about a quarter of cybercrimes aimed at the industry.
Nearly half of all traffic to retail sites isn’t even human. Between 2021 and 2022, around 40% of retail traffic came from bots—automated programs that can scrape customer data, test stolen credentials, or even crash a site.
And it’s not just big firms that are at risk. A whopping 43% of all cyberattacks target small businesses, more than 60% of which are forced to close within six months of a breach.
Retail owners risk losing data, reputation, money, and even their business to retail cybersecurity attacks.
What are the most common retail cybersecurity threats today?
Credential phishing attacks
Phishing is a form of social engineering that exploits 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 on harmful links, or downloading malware.
With the stolen data, criminals commit identity theft, credit card fraud, or account takeovers.
Phishing is the biggest cybersecurity concern for ecommerce retailers. According to Cybersource’s 2023 Global Ecommerce Payments and Fraud Report, phishing accounted for 43% of all attacks in 2023, compared with 35% in 2022.
Malware infiltration and data theft
Malware (or malicious software), such as Trojans and viruses, is used to access or steal sensitive customer data. It infiltrates retail systems through third-party software downloads, phishing emails with compromised links/attachments, or supply chain vulnerabilities.
Once in a network, malware can steal customer information such as credit card details, login credentials, and financial data. Point-of-sale (POS) systems are particularly vulnerable.
In 2013, malware infiltrated Target’s POS system and stole more than 40 million debit and credit card numbers. The company had to pay a settlement claim of $18.5 million.
Ransomware encryption and demands
Ransomware is how criminals encrypt company data and demand ransom payment for decryption.
Many businesses agree to pay up rather than disrupt operations for long. It’s a top threat in 92% of industries, with an average loss of $46,000 for those who pay.
In 2023, 69% of retail companies faced ransomware attacks, with 71% of attackers successfully encrypting data. Only 26% of the companies could stop the attacks before encryption.
DDoS attacks for service disruption
Distributed denial of service (DDoS) attacks happen when attackers flood websites with traffic using botnets (connections of infected machines), creating downtime and revenue loss.
Almost half of retail website traffic comes from bad bots and malicious automation. During DDoS attacks, buyers can’t access a site, resulting in lost business and reputational damage.
In ecommerce, the infamous Grinch bot is known for hoarding inventory during the holiday shopping season, making it difficult for customers to buy popular items online.
Web app vulnerabilities for data theft
Hackers exploit weaknesses in ecommerce platforms to steal customer information through malicious code injection, database query manipulation, or cookie tampering.
Cyberattackers usually sell 65% of these stolen credentials to criminal forums within a day of collection. Customer and employee information is constantly at risk, and a successful attack can seriously damage a business’s reputation.
Social engineering manipulation
Social engineering uses tactics like spear phishing (targeted phishing attacks) and whaling (phishing aimed at top executives) to trick someone in a company into revealing sensitive information or granting network access.
To give a context of how costly this can be, business email compromise (BEC) can result in a median loss of around $50,000.
Supply chain software vulnerabilities
Supply chain attacks are dangerous because they can target multiple retailers through a single supplier by exploiting vulnerabilities in third-party software. So, if one supplier doesn’t have strong security in place, a business’s network is susceptible to attacks.
Ecommerce companies’ reliance on third-party services for payment processing, supply chain management, and customer support creates potential weak spots. These attacks grew by 742% between 2019 to 2022.
Retail cybersecurity challenges and how to overcome them
Data leaks
Data leaks take place when sensitive information is exposed to unauthorized parties, often due to security gaps or human error. This can include customer data, financial records, or proprietary business information.
The retail sector is particularly vulnerable, ranking third in data leak susceptibility. Even more concerning, 82% of buyers say they’ll stop online engagement with brands following a data breach.
Weak cybersecurity practices, poorly secured credentials, human errors, and third-party vulnerabilities are common causes of retail data breaches. Verizon’s 2024 Data Breach Investigations Report reveals that 68% of breaches involved a human element, while 32% involved ransomware or extortion.
Steps to take:
- Encrypt sensitive data to stop cybercriminals from using leaked information.
- Regularly assess third-party vendors for compliance with cybersecurity standards.
- Maintain compliance with regulations like PCI-DSS and GDPR.
- Use data loss prevention (DLP) software to monitor and control data transfers.
- Train employees on data breach prevention and cybersecurity in the retail industry.
Cybersecurity skill gap
The global cybersecurity workforce is short by about four million professionals, with the gap expected to widen as demand for cybersecurity skills continues to outpace supply.
The ecommerce sector, too, suffers from this skill gap that makes it tough to protect buyer data and keep operations secure.
Verizon states that 68% of data breaches happen due to human errors, which means training employees needs to be at the top of your list.
Steps to take:
- Invest in good upskilling programs for your existing IT staff.
- Use AI-powered security tools to complement human capabilities.
- Support employees in getting certifications related to cybersecurity in retail.
- Provide competitive compensation to cybersecurity recruits and encourage diversity in hiring.
- Create cross-functional teams to spread cybersecurity awareness across the organization.
- Invest in post–data breach preparedness (75% of increased breach costs come from lost business and post-breach response activities).
Web application attacks
Web application attacks exploit weaknesses in ecommerce 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. Other vulnerabilities include outdated legacy systems, insecure third-party JavaScript, and overly lenient network access.
Steps to take:
- Use secure coding practices and conduct regular code reviews.
- Keep all software, especially legacy systems, updated and patched.
- Limit and thoroughly vet third-party JavaScript usage.
- Use web application firewalls (WAF) to detect and block malicious traffic.
- Implement strong authentication measures, including multifactor authentication.
Insider threats
Insider threats are risks posed by people within an organization, including employees, contractors, or partners. These threats can be either malicious (intentional harm for personal gain) or negligent (unintentional harm due to carelessness or lack of awareness).
For example, a disgruntled employee may access customer credit card information and sell it on the Dark Web, or a negligent colleague may connect to company systems through unsecured public Wi-Fi networks.
Detecting insider threats is difficult because these people have legal access to the company’s systems and data. So, traditional security tools like firewalls often are ineffective against these threats.
In 2022, the average cost to tackle insider threats increased by 62% year-on-year, to reach a whopping $16.56 million.
Steps to take:
- Perform regular risk assessments of employee access rights.
- Put strict access controls in place to make sure people have the minimum necessary access.
- Use a zero-trust security model, which treats every user and device as potentially untrustworthy until they’ve been verified.
- Apply advanced analytics and machine learning to track user behavior and spot suspicious patterns.
IoT devices
An Internet of Things (IoT) device cyberattack happens when weaknesses in connected retail devices are abused. These attacks target smart devices like point-of-sale (POS) systems, inventory trackers, security cameras, digital signage, smart shelves, and RFID tags.
Cybercriminals can compromise these devices to gain unauthorized access to sensitive data, disrupt operations, or use them as entry points into your broader network.
About 57% of IoT devices are prone to moderate or high-severity attacks, which shows why it’s crucial to take strong security measures.
Steps to take:
- Make sure that IoT devices receive regular software and firmware updates to patch vulnerabilities and protect against known threats.
- Use strong authentication methods and access controls.
- Separate IoT devices from critical business systems through network segmentation, so potential intruders can’t access the whole network.
Ecommerce fraud
In 2023, ecommerce fraud resulted in around $48 billion in annual losses, with companies losing 2.9% of their revenues as a result.
Here are some common types of ecommerce fraud that can affect a business:
- Account takeover (ATO): Attackers use stolen credentials to hack into customer accounts, make unauthorized purchases, or steal personal information.
- Chargeback fraud (friendly fraud): Customers dispute legitimate charges to get refunds, often after receiving the product. More than one-third of retailers experience friendly fraud. For every $100 in friendly fraud, retail organizations spend up to $35 in dispute charges.
- Payment fraud: Unauthorized payments made using stolen credit cards. Around 43% of customers have experienced payment fraud.
- Interception fraud: Fraudsters order parcels with a stolen card and the billing and shipping address matches that of the card. They then intercept parcels before they reach the buyer, often by changing the delivery address by calling up customer care or the delivery company.
Steps to take:
- Educate customers about common ecommerce fraud tactics.
- Carry out card verification and identity verification checks.
- Analyze customer order history for suspicious transaction patterns.
- Use AI-powered fraud detection systems, which use machine learning algorithms to review transaction patterns in real-time.
- Apply multifactor authentication, 3D Secure (3DS) authentication, and payment tokenization to add extra layers of safety to transactions.
- Invest in integrated ecommerce platform solutions like Shopify Protect and Shopify Payments, which have built-in fraud analysis and chargeback protection.
- Collaborate with vendors, banks, and payment processors to tackle fraud together.
Recent retail data breaches
Forever 21
Clothing and accessory retailer Forever 21 experienced a data breach between January and March 2023, affecting more than half a million past and current employees.
An unauthorized third party gained access to sensitive information including names, dates of birth, Social Security numbers (SSNs), bank account numbers, and Forever 21 health plan details.
The company assured affected people that the stolen data was erased after the breach, which was believed to be a ransomware attack.
Forever 21 offered the victims one year of free fraud and identity theft protection.
Neiman Marcus
Luxury department store Neiman Marcus reported a data breach in May 2024. The breach—part of a larger incident involving cloud storage company Snowflake—exposed customer names, contact information, birthdays, and gift card numbers. Payment card PINs were reportedly not compromised.
A hacker named Sp1d3r claimed to have demanded ransom from the retailer, which the latter refused. The hacker allegedly sold the database for $150,000, asserting it contained additional information such as partial Social Security numbers.
Have I Been Pwned founder Troy Hunt analyzed the data, revealing that more than 31 million customers’ email addresses were compromised in this hack.
Neiman Marcus experienced several data breaches over the past decade, including in 2013, 2015, and 2020.
Best retail cybersecurity solutions
Shopify POS
Shopify POS provides a number of features for retailers to prevent unauthorized access and ensure compliance when processing in-person sales. These include:
- Staff permissions: Set specific permissions for staff members to control their access to Shopify POS. Staff must have the necessary permissions to log in an use the POS app.
- Staff PINs: Each staff member uses a unique 4 to 6-digit PIN to access the Shopify POS app. Each transaction is tied to the employee who processed it, so everyone is accountable.
- Re-entry of PIN for security: During a transaction, if an error occurs or if the checkout is canceled, the staff member must re-enter their PIN. This prevents unauthorized access during the checkout process.
You can create custom POS roles defining staff members' actions within the POS app. For instance, you might create a "Junior Sales Associate" role that can process standard sales and check inventory, but requires manager approval for refunds over $50 or applying discounts above 10%.
Meanwhile, a "Shift Supervisor" role would have permission to process all refunds up to $200, modify inventory counts, and approve staff discounts.
💡Note: Staff with limited permissions cannot access the POS unless a staff member with the appropriate permissions logs in first, which adds an additional layer of security.
Shopify Protect
Shopify Protect works together with Shop Pay (Shopify’s accelerated checkout option) to provide complete protection against fraud and chargebacks for ecommerce businesses. The powerful duo offers a retail checkout that converts 1.72 times higher than standard checkout methods.
Shopify Protect will automatically activate for US-based stores using Shop Pay for online payments. There is free fraud protection on eligible Shop Pay transactions, covering the total order cost, including chargeback fees.
Across its platform, Shopify provides robust security measures, including SSL encryption, protection against DDoS attacks, and strict adherence to PCI DSS compliance.
Lacework
Lacework’s unified cloud security solution protects web applications throughout their lifecycle. Using advanced machine learning, it accurately spots unusual activity and groups related alerts, reducing notification overload and allowing cybersecurity teams to focus on critical issues.
Lacework integrates with major cloud platforms like AWS, Azure, and Google Cloud, supporting businesses to safely use cloud technology.
Arctic Wolf
Arctic Wolf’s cloud-native security operations support businesses of all sizes, with more than one million licensed users and 4,000 global clients.
Its complete visibility across endpoints, networks, and clouds removes blind spots, making sure no potential threats go unnoticed. Arctic Wolf’s Security Operations Cloud analyzes trillions of security events weekly, supporting quick threat detection and response.
CyberArk
Trusted by over half of the Fortune 500 companies, CyberArk is a leader in identity security. It offers a balance of stringent security measures and user-friendly solutions for businesses and individuals.
CyberArk is great at safeguarding personal and automated accounts. This helps users access resources and work environments safely from any location and device.
Protect your retail from cybersecurity threats
A single retail cybersecurity attack can ruin your reputation, potentially causing four out of five buyers to leave and your business to meet an uncertain future.
Investing in robust cybersecurity for retail gives you both immediate and long-term advantages, such as cutting down on revenue loss, improving brand reputation, and building customer loyalty.
Retail cybersecurity FAQ
Why is cybersecurity important in the retail industry?
Retail cybersecurity protects sensitive customer data, financial information, and business operations from theft and disruption.
What is the most common cyber attack in retail?
Point-of-sale (POS) malware attacks are a common challenge and they target payment card data.
What are the different cybersecurity challenges in retail?
- Protecting customer data
- Securing ecommerce platforms
- Defending against POS malware
- Managing third-party vendor risks
- Ensuring compliance with data protection regulations
What are the top 3 targeted industries for cybersecurity?
While specific rankings can vary, the top three highly targeted industries are:
- Manufacturing
- Finance and insurance
- Professional, business, and consumer services
Retail and wholesale are among the top five industries to be targeted by cyberattacks.
