Cybersecurity in Retail: Protecting Your Business from Modern Threats

The retail business has grown significantly in this modern age. However, along with this growth is a challenge that is retail cybersecurity threats. It occurs when cybercriminals detect a vulnerable point in your system and make an unauthorized intrusion. They will then steal your data and leverage that to achieve their interests.
retail cybersecurity

One example is T-Mobile mega data breach. In August 2021, T-Mobile announced the cybercriminals were able to gain access to T-Mobile’s data servers and steal sensitive customer information of approximately 37 million customers. They ended up paying an enormous amount of USD$350 million. 


Seeing such severe repercussions, retail businesses should start taking steps to secure the data and information of their system, not just those of their customer, but also of their employees, and many other stakeholders. 

This article will give you a comprehensive picture of some common types of cyber attacks, what happens if the company fails to protect its security, and at the end of it, we share four best practices to help you improve your cybersecurity posture.

Types of Cyber Threats Faced by Retail Stores

Cyber attacks come in many shapes and forms. Here are some common ways cybercrimes take place.

Phishing Attacks

Phishing is commonly conducted via email. Research shows the retail industry is at risk of more than 400% increase of phishing scams.  Cybercriminals play with emotions. They send malicious emails with exciting content such as promotions, new product launches, etc., to entice users to click on links or attachments which then trigger your system to install malware. Imagine if your employees fall for it, what you are losing would be confidential information such as credit card, social security, and account password. Not only does this cost you money and time to retrieve your information, but you are also forced to halt operations and suffer from reputational damage. Earlier, we have seen Indigo being hit by a cyberattack, and for over a month, the bookstore was still grappling with the aftermath and hadn’t resumed normal operation.


Fraudsters follow the money. While we saw a great volume of retail transactions switching to online during the pandemic, we also saw a huge spike of fraudulent activities associated. Together with peak shopping seasons, such as Black Friday, and Cyber Monday, and the people-heavy nature of the industry, all these present a golden opportunity for cybercriminals. 


Ransomware and Malware

Malware is a malicious software that can infect computers or devices. It allows cybercriminals to steal data, spy, and corrupt the system. The victims often are unaware of how penetrated the malware has spread in the system over a period of time. The retail industry has reported a 75% increase in the rate of attacks over the last year, and 77% of businesses were hit. Not only is the rate of attack that went up but so does the amount of ransom needed to restore encrypted data year over year. The threat is real for businesses. 

Ransomware is a kind of malware, and it causes devastating damage to retail businesses. It will encrypt files or systems and then ask for ransom payments. 

One example is the DarkSide group attack on Guess — a US clothing retailer. The cybercriminals group had successfully encrypted Guess’s operation, including e-commerce websites, logistics, and customer service, and demanded a huge ransom payment for decryption. 

Some retailers have resorted to cyber insurance, which is reassuring to know that insurers will pay some of the costs associated with the attack, but unfortunately, the sector has one of the lowest payout rates by cyber insurers. 

IoT, AI, and Machine Learning System Attack

The State of Security Within eCommerce 2022 Report shows that automated attacks have become a persistent challenge to the industry. The most common attack is botnets that launch a denial-of-service (DDoS) attack which overloads the system with heavy traffic, posing a threat to online sales and severely reducing customer satisfaction.  

Insider Threats

Insider threats could come from current employees, former employees, contractors, or partners, and they don’t have to be intentional. They are potential cybersecurity threats to the retail business as they have authorized access to the organization’s system. With a high employee turnover rate and the franchising and outsourcing nature of the industry, these increase the attack surface, presenting more opportunities to malicious actors.  

Consequences of a Cyber Attack on Retail Stores


Cybersecurity threats continue to plague the industry and retailers are only becoming a more attractive target as technology is rapidly replacing our traditional ways of conducting transactions. We have seen a successful attack completely wiped out a business and that is devastating.  Below we break down the multitude of consequences a victim may suffer from. 

Financial Losses

Financial losses attributed to a cyber attack include theft of funds from accounts, compensation for affected customers, system recovery costs, and business security upgrades. In 2014, Kmart was the victim of a cybercrime, losing over $5 million in a single incident.

Reputational Damage 

When criminals steal customers’ credentials, it is almost impossible for the retail business to retain those customers. For some victims, their incidents might receive worldwide media coverage. It also creates a sense of doubt lurking among potential customers,  investors, and partners about the company’s operation and long-term resilience. The business impact on their brand will ultimately cut into sales.

Legal and Regulatory Violation

A cyber attack can cost the retailer severe fines, followed by lawsuits and investigations because of the failure to fulfill industry regulations. In 2017, Equifax was fined 700$ million by the US Federal Trade Commission for a customer data protection breach.

Business Downtime

When a cyberattack occurs, the retailer halts all activities for investigation and recovery. This also has a significant financial impact on the sales that are lost during downtime. 

4 Cybersecurity Best Practices for Retail Stores 

Whether an attack is simple or sophisticated, the results can still be disastrous. Retailers today should start seeing cybersecurity as an investment and integrate it into their business strategy. 

Enhance Employee Cybersecurity Awareness

There is an opportunity to turn your employees into your strongest line of defense. Untrained and unprepared employees are likely to fall victim but if you can provide regular training, this will greatly up your chance of surviving an attack. Thorough training about the importance of cybersecurity, the roles of employees in safeguarding the company, and ways to recognize potential cyber threats would greatly improve your odds.

Use Secure Software for Your Business

retail transaction

When managing one or many retail stores, retail management software is essential for every business. However, choosing a reliable system that operates smoothly and securely will help retail owners manage online and in-store operations seamlessly. Such systems not only help facilitate the sales process, manage orders, customer data, and inventory reports in warehouses, but also allows the retailer to sync all customer & order data in a timely and secure way,  so you are less worried about data loss or network intrusion. 


Unlike retail stores, cybercriminals do not have defined operating hours, and attacks can come from anywhere worldwide. This makes monitoring critical in giving you peace of mind 24/7. Cybersecurity threat detection monitors potential risks for you round the clock, sending you alerts so that you can investigate and determine if it is worth digging deeper into, and at the same time, giving you the opportunity to solve it before it escalates into a serious incident.  

Encrypt Company’s Data

Encryption is converting information to code to prevent cybercriminals’ intrusion. Even if it seems like you have done everything possible to prevent data compromise, bad actors can still find their way. Ensure all stored data is encrypted, and consider using a third-party service that will add an extra layer of protection. 


While technology has brought countless opportunities to the retail industry, it also brings with it new challenges that need to be addressed to ensure cyber resilience. Cybersecurity is not a one-and-done activity. Retailers must implement robust cybersecurity measures to prevent cyberattacks and take immediate action against potential threats. It requires comprehensive practices such as regular monitoring and software updates, employee training, and selecting a quality third-party vendor to secure customers’ sensitive information and avoids financial losses, reputation damage, and operational challenges.

*This article is provided by Katie Nguyen, a digital marketing specialist at that provides advanced POS solutions for retailers on Magento. Magestore focuses on bringing useful and valuable software solutions to retailers around the world.

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