Turning Cybersecurity into a Retailer's Strategic Advantage
By integrating the "three R's" of cybersecurity — risk, resilience and recovery — into their growth strategies, retailers can transform cybersecurity from a mere compliance obligation into a significant competitive edge.
In retail, speed is crucial. Retailers must quickly adapt to customer demands, enhance operational efficiency and uncover new revenue streams before their competitors do. They often lead in testing and launching new digital experiences, setting higher expectations for consumers across industries.
While this rapid digital transformation has delivered amazing, unexpected customer and employee experiences, it has also expanded retailers' attack surfaces and placed them in the crosshairs of sophisticated cybersecurity threats. These range from ransomware attacks that can halt operations to targeted phishing scams and data breaches that compromise sensitive customer information. Such incidents can significantly impact financial stability, harm brand reputation and erode the customer trust that retailers have worked hard to earn.
The reality is that retailers cannot halt their operations for security's sake. Instead, cybersecurity must become an elemental component of their business, embedded in online shopping experiences, in-store technology and employee processes. This approach allows retail business leaders and security teams to continue delivering digital experiences that wow their customers while making their organizations more secure, all together.
By integrating the "three R's" of cybersecurity — risk, resilience and recovery — into their growth strategies, retailers can transform cybersecurity from a mere compliance obligation into a significant competitive edge.
Start by understanding the risks
Retailers' e-commerce platforms, interconnected supply chains and vast troves of customer data have become prime targets for cyber criminals. In a survey of more than 500 retail organizations, 45 percent of leaders reported being hit by ransomware attacks in 2024 and 40 percent identified malicious emails or phishing scams as the starting point of those attacks. The question isn't whether a retailer will be attacked, but when.
Understanding why these attacks happen and how they might impact your organization will help you strengthen your security posture and maintain customer trust. Ransomware attacks can cripple online operations, holding critical systems and information hostage. Meanwhile, advanced phishing scams often target seasonal retail workers less familiar with company communications by using social engineering tactics to infiltrate secure networks. The impact of these incidents can be devastating, resulting in direct financial losses, lasting reputational damage and decreased market share.
Research shows that the average cost of a data breach in the retail sector exceeds $3.4 million, with the indirect costs of lost business, downtime, labor costs, device and network costs, and customer churn averaging an additional $2.73 million.
By continuously evaluating and mitigating risks, retailers can prevent potential cyber threats from disrupting their operations and jeopardizing their brand reputation.
Build resilience into your retail ecosystem
Once you understand your organization's cybersecurity risks, the next step is to create a comprehensive information security program that builds resilience within your organization's digital ecosystem, across your suppliers and partners, and among your employees.
Within your digital ecosystem
It's crucial to integrate security controls and protocols into your digital initiatives and ecosystem from the beginning, treating it as a core element rather than an afterthought.
Start by identifying the critical access points and data flows within your technology landscape — such as e-commerce platforms, point-of-sale systems, supply chain management tools and customer data repositories — and then implement strong security measures to protect them.
Advanced access controls, like multi-factor authentication and zero-trust architectures, can be deployed to verify the identity of users, devices and applications before granting access. Data encryption can also prevent unauthorized access or tampering. Lastly, you'll want to consider incorporating automated security testing and regular vulnerability assessments into the software development lifecycle to proactively mitigate risk.
Across your suppliers and partners
Your information security program should extend beyond your own systems to your third-party partners and suppliers. Carefully evaluate their security posture and establish clear security requirements and monitoring protocols to ensure the integrity of the entire supply chain. We recommend asking the following questions:
- What security certifications or compliance standards do you hold (e.g. ISO 27001, SOC 2, PCI DSS)? Can you provide proof of your certification status?
- What security controls and protocols do you have in place to protect sensitive data that you may access or store on our behalf?
- What is your incident response plan?
- How frequently do you conduct security assessments, penetration testing and vulnerability scanning on your systems and applications?
- How do you vet and monitor the security posture of your own vendors and suppliers?
It's also worth noting that resilience is evolving from solely preparing for malicious attacks to addressing vendor mistakes that can lead to widespread, catastrophic outages — sometimes triggered by something as simple as faulty code. When engaging with and selecting security vendors, it's crucial to plan for redundancy to prevent a single vendor's disruption from taking your entire operation offline.
Among your employees
Technology alone isn't enough to safeguard against cyber threats. Cultivating a culture of cybersecurity awareness among employees is crucial. As discussed earlier, human error and vulnerabilities are often the entry point for attackers.
Retail leaders must empower their workforce to act as the first line of defense, equipping them with the knowledge to identify and respond to potential threats. This includes comprehensive security training, phishing simulations and consistent communication on cybersecurity best practices.
You might also consider embedding security champions in every part of your business. These individuals act as liaisons between the broader workforce and the security team to ensure buy-in and enable customized security solutions tailored to each department's needs.
By fostering a culture of shared responsibility, retailers can turn employees into assets against cyber threats and maintain a seamless customer experience that's essential for growth and loyalty.
Be prepared to respond and recover
Even the most robust cybersecurity measures aren't immune to attacks. A retailer's true test of resilience lies in how effectively it can respond and recover when the unthinkable happens.
Retail leaders must work closely with their security teams to develop comprehensive playbooks that outline what to do during a cyber incident. These playbooks should include clearly defined communication protocols, remediation procedures and business continuity measures to minimize operational disruptions. Many of our retail clients are utilizing AI and automation to help rapidly detect anomalies, triage alerts and initiate automated containment and remediation measures so they can recover faster.
From there, you'll want to regularly test and refine your incident response plans through simulated exercises. By putting teams through a realistic breach scenario, you can identify gaps, optimize processes and ensure that everyone is prepared when a real crisis strikes.
Finally, don't overlook your communication plan. In the aftermath of a cybersecurity incident, effective, transparent and empathetic communication with customers, partners and regulators can go a long way. Prepare now by documenting all the parties that need to be informed during an incident, the best channels to reach them and messaging templates for different types of incidents. These should include key information such as what happened, the impact, and steps being taken to resolve the issue and prevent future occurrences.
With a strong recovery and response plan in place, retailers can emerge from a crisis stronger than ever, with their brand reputation and customer relationships intact.
Conclusion
In an increasingly competitive industry, retailers must capitalize on opportunities to accelerate innovation and drive competitive advantage. One such opportunity is embracing cybersecurity as an enabler of success.
By proactively addressing risks, building a resilient digital ecosystem and culture, and preparing for swift recovery, cybersecurity can become an avenue for cultivating customer trust, driving brand loyalty and accelerating growth — all while safeguarding the future of your business.
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