Top 10 Cyber Threats Retailers are Facing

The retail sector has historically faced its fair share of security challenges. Traditionally, these have been “physical” challenges. However, the age of big data is shifting the focus. Data has become as valuable as the stock on shelves, if not more so and the bad news is that cyberthreats are increasing in number and sophistication.

Here, we look at these cybersecurity threats and discuss some sound strategies that can minimize the threats for retailers. From sophisticated phishing schemes to disruptive ransomware attacks, we uncover the nature of these threats and the solutions to combat them.

Overview of Retail Cybersecurity

Cybersecurity is a simple concept – a series of digital and to a lesser degree physical security measures designed to protect the integrity of your data. But this doesn’t do justice to the gravity of the situation. Locked up within all that data are customer trust & loyalty, regulatory compliance, and the ongoing operation of your business.

Protecting such a resource has always presented challenges. However, recent shifts in how we store and access data have opened a host of new vulnerabilities. The shift to cloud computing models has distinct advantages but it carries risk, with 40% of organizations experiencing a data breach in the cloud according to a study published by Statista.

This shift has made cybersecurity an essential component of retail operations and opens up areas of increased risk that include:

• Expanded attack surface: The increasing reliance on cloud-based systems has opened up new opportunities for hackers and bad actors.
• High-value data: Data has moved from being a useful resource to a critical business asset.
• Complex supply chains: The increasingly interconnected nature of supply chains has brought efficiencies but at the cost of increased vulnerabilities.
• Evolving threat landscape: Cyber threats are evolving at an incredible pace often outpacing traditional security measures.

Forewarned is forearmed and understanding the nature of the cyber threats facing retailers is a necessary first step when creating a comprehensive cybersecurity strategy.

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Key Cybersecurity Threats Retailers Are Facing 

Cybersecurity has been with us almost since the dawn of the digital age. However, the early threats could be considered merely inconvenient. That is no longer the case. Nowadays, a cyberattack means more than just a PC that doesn’t boot or some annoying pop-ups – it can cripple operations and destroy reputations. This is why it is crucial to understand the nature of the threats and the solutions that can mitigate them.

Key threats that retailers should be aware of include:

1. Phishing Attacks

Phishing attacks involve deceptive emails or messages that mimic legitimate sources, aiming to steal sensitive data like login credentials or financial information. These attacks also evolve rapidly and in the “new age” of phishing attacks, they are becoming increasingly sophisticated.

These attacks exploit human error and can lead to significant financial losses and data breaches. The retail sector, with its vast customer databases and financial transactions, is particularly vulnerable to these sophisticated scams.

Solutions to Phishing Attacks:

• Employee training: Regular workshops to recognize and report phishing attempts.
• Advanced email filtering: The importance of secure email cannot be overemphasized. Implementing software that identifies and blocks phishing emails is a must.
• Two-factor authentication: Adding an extra layer of security for accessing sensitive data.

2. Ransomware

Ransomware is as exactly as it sounds and its consequences can be devastating.  In ransomware attacks, data is encrypted, and – probably unsurprisingly – a ransom is demanded to unlock it. It is worth noting that payment of the ransom does not always result in your data being released. The critical nature of data in the retail sector makes the sector a prime candidate for such attacks. Additionally, the increasing sophistication of ransomware makes it a formidable challenge, with sophisticated attacks often able to bypass standard security measures.

“In the long term, frequent fraud results in elevated processing expenses. Banks and payment processors will adjust their pricing plans to reflect these expenses, and the business will suffer loss of reputation over time. They will also incur losses in handling the process. Consequently, taxes will continue to grow as the company expands.” – Ariel Chen, CEO & CoFounder of Chargeflow.

Ransomware attacks can cause long-term financial damage, not only from the ransom itself but also from the fallout with banks, processors, and customers. The damage to reputation and ongoing costs add another concern for retailers.

Ransomware Solutions:

• Regular data backups: Ensure data is backed up frequently and always keep an offsite backup that is kept separate from your main IT infrastructure.
• Updated security protocols: Keep all systems and software updated with the latest security patches.
• Employee awareness: Train staff to recognize and avoid suspicious links and attachments.

3. POS System Breaches

Point of Sale (POS) breaches are of obvious concern to the retail industry. These breaches occur when cybercriminals infiltrate POS systems to steal customer payment information.

These attacks are becoming more numerous as the move to a “cashless” society gathers pace and the bulk of transactions become digital. The high volume of card and contactless payments in the retail sector sets it up as a high-value target.

Solutions for POS System Breaches:

• Enhanced security measures: Implement end-to-end encryption and use secure payment processing technologies.
• Regular system updates: Keep POS software regularly updated to patch vulnerabilities.
• Employee training: Educate staff on secure handling of POS systems and recognizing suspicious activities.

4. DDoS Attacks

Distributed Denial of Service (DDoS) attacks are a significant threat to retailers, especially those with a strong online presence.

Although there are different types of DDoS attacks the normal goal is to flood a website or online service with overwhelming traffic, causing it to slow down or – in the worst cases – crash completely. For retailers, this can mean disrupted sales, damaged customer relationships, and a damaged brand reputation.

The ease with which these attacks can be launched, even by less skilled hackers, makes them a persistent concern for the retail industry.

Solutions for DDoS Attacks:

• Robust network security: Implement advanced network security solutions to detect and mitigate DDoS attacks.
• Traffic monitoring: Continuously monitor website traffic to identify and respond to unusual spikes.
• Backup and contingency plans: Establish backup systems and contingency plans to maintain operations during an attack.

5. Insider Threats

Not all cyber threats are external. The risk of manual data breaches – often associated with insider threats – is ever-present with one report by Information Week pinning the level of “manual data breaches” at a staggering 35%.

The retail sector, with its high employee turnover and sensitive customer data, is particularly susceptible. These threats are challenging to detect and prevent, as they originate from trusted individuals with legitimate access.

Solutions for Insider Threats:

•  Access control: Implement strict access controls and regularly review access privileges.
•  Employee screening and training: Conduct thorough background checks and provide ongoing security awareness training.
•  Monitoring and Detection Systems: Utilize advanced monitoring tools to detect unusual activities. Integrating robust inventory management software like Katana’s can also enhance internal oversight and data security.

6. Supply Chain Attacks

At first glance, the threat of supply chains would appear to be outside of a retailer’s control. As with any chain, the problem will always lie with the weakest link, and if your cybersecurity strategy is up to scratch, then the weakest link is likely to lie elsewhere. The result is that traditional cybersecurity measures are effectively powerless.

However,  while supply chain security is undoubtedly more challenging, there are still solutions that can minimize a retailer’s exposure to this risk.

Solution for Supply Chain Attacks:

• Vet suppliers’ security: Rigorously assess and monitor the cybersecurity practices of all suppliers.
• Segmentation of networks: Separate critical network segments from those accessible to suppliers.
• Regular security audits: Conduct frequent security audits of the supply chain.

7. Malware and Advanced Persistent Threats (APTs)

Malware and Advanced Persistent Threats (APTs) use malicious software to infiltrate retail systems. Malware is hardly a new threat, but it is continually evolving and becoming more sophisticated with each generation.

APTs are a complex form of attack that often “piggy-backs” on pre-existing malware.  APT attacks steal data over long periods. This is an incredibly sophisticated form of attack and is often associated with attacks carried out by nation-states.

However, more recently – and worryingly – there has been a rise in the use of APTs among organized crime groups.

Solutions for Malware and APTs:

• Advanced threat detection: Employ cutting-edge malware detection and response systems.
• Continuous monitoring: Implement continuous monitoring for unusual network activities.
• Regular security training: Keep staff updated on the latest threats and response protocols.

8. Data Leakage

Data leakage could be considered an “accidental”  data breach. In retail, this often occurs through the unintentional exposure of sensitive information, such as customer data or internal communications. While there is no maliciousness as such behind this form of data breach, its occurrence can still be largely attributed to inadequate security protocols, employee errors, or system vulnerabilities.

For retailers, the consequences of data leakage are severe regardless of whether or not it’s accidental. Among the consequences of data leakage are legal repercussions, loss of customer trust, and financial damage.

Data Leakage Solutions:

• Enhanced data security: Strengthen data protection measures, including encryption and secure data storage.
• Employee training: Regularly train employees on data handling and privacy protocols.
• Regular security audits: Conduct thorough audits to identify and address potential vulnerabilities.

9. E-skimming

E-skimming is a form of APT attack that involves malicious code that is injected into online platforms. Once injected and activated it can steal customer information – including their payment details. The problem is compounded because, as is common with APT attacks, incidents can go undetected for long periods.

With each online transaction presenting an opportunity for data theft, this threat is greater for retailers who conduct high volumes of online sales.

E-Skimming Solutions:

• Regular website audits: Conduct frequent security audits of the online platform to detect vulnerabilities.
• Secure payment gateways: Utilize secure and reputable payment gateways with robust fraud detection.
• Real-time monitoring: Implement real-time monitoring for suspicious activities on the website.

10. Cloud Security Vulnerabilities

Cloud computing is a double-edged sword. On the one hand, there are many associated benefits with this form of data storage. However, there is no such thing as a free lunch and there are plenty of challenges with cloud computing. Not least of which is security.

Cloud-based infrastructure introduces vulnerabilities that can arise from misconfigured cloud settings, inadequate security measures, or flaws in third-party services. Such weaknesses can lead to unauthorized access, data breaches, and service disruptions.

Solutions for Cloud Security Vulnerabilities:

• Regular security assessments: Conduct frequent assessments of cloud configurations and security settings.
• Employee training: Educate staff on cloud security best practices and potential risks.
• Collaboration with cloud providers: Work closely with cloud service providers to ensure up-to-date security measures and rapid response to threats.

Cyber Security Threats In Retail: The Importance of Robust Security

If it was only about protecting your data the arguments for robust security are still compelling. But it is more than just this, protecting your data is about protecting your operation’s biggest assets – Its reputation, brand identity, operations, and the trust of the customers whose data you hold.

No one magic wand can be waived to address these challenges. Rather, it is a multi-pronged approach that begins with identifying the risks and then making sure there are adequate mechanisms in place to mitigate them. 

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Ahona Rudra

Domain & Email Security Expert at PowerDMARC

Ahona is the Marketing Manager at PowerDMARC, with 5+ years of experience in writing about cybersecurity topics, specializing in domain and email security. Ahona holds a post-graduation degree in Journalism and Communications, solidifying her career in the security sector since 2019.

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