Digital Shoplifting at Scale: How Cybercriminals Target Retail

Retailers have long battled traditional shoplifting, but today’s cybercriminals are stealing on a scale that physical theft could never achieve, compromising millions of customer records and operational systems in single cyberattacks. As the retail sector digitizes rapidly, security leaders face an expanding attack surface that requires comprehensive protection strategies.
 

Digital Transformation Creates New Retail Cybersecurity Challenges

The retail sector accounts for nearly $1.9 trillion annually, or over 6 percent of U.S. GDP. With online retail sales doubling since 2016, the digital footprint of retailers continues to expand dramatically, creating new cybersecurity challenges.
“The retail sector’s digital revolution has unlocked unprecedented growth and convenience, but it also exposes an ever-widening attack surface,” explains Matt Lindley, NINJIO’s Chief Innovation & Information Security Officer. “With billions of dollars and customer trust at stake, cyber risk in retail must be treated like any other critical business threat—prioritized, well-funded, and continuously addressed.”
 

The Surge in Cyberattacks on the Retail Industry

Recent data reveals a concerning trend in retail cybersecurity:

• Intrusions in retail surged by 55% from 2023 to 2024
• The financial impact of retail data breaches increased by nearly 18% from 2023 to 2024
• Supply chain breaches jumped by 68% year over year
• Phishing in e-commerce increased by 23%, becoming the most common fraud vector

These statistics reveal not just increasing attack volume, but also greater sophistication and higher costs. The retail sector is experiencing a perfect storm of digital expansion, evolving attack vectors, and rising financial consequences that demand more robust retail cybersecurity measures.
 

Ransomware: A Growing Threat to Retail Operations

Ransomware deserves special attention as a growing threat to retail operations. Sophos reports that 45 percent of companies in the retail sector were hit with a ransomware attack over the past year. The damage goes far beyond the initial breach:

• Technical defenses often fail
  In 56% of ransomware attacks, retailers were unable to prevent cybercriminals from encrypting their data, highlighting the need for layered retail security protection strategies.
• Financial demands have escalated dramatically
  The proportion of retailers paying ransoms jumped from 43% in 2023 to 60% in 2024, with demands routinely exceeding $1 million and payments averaging $2.2 million.
• Total impact far exceeds the ransom
  When factoring in business disruption, technical recovery, and reputational damage, total average recovery costs have increased from $1.85 million in 2023 to $2.73 million in 2024.

Beyond direct financial losses, retail ransomware attacks cause significant operational disruptions that can halt sales, damage customer relationships, and trigger regulatory scrutiny, which further emphasizes the need for proper cybersecurity awareness training in the retail industry.
 

Real-World Consequences of Data Breaches

Recent cyberattacks demonstrate the wide-ranging impacts on retail operations:

• Operational Disruption: Ace Hardware suffered a cyberattack in 2023 that took critical systems offline for days, disrupting warehouse management, communications, and order placement.
• Customer Data Exposure: JD Sports warned 10 million customers that their personal and payment data may have been breached in a 2023 incident spanning nearly two years of online orders.
• Employee Information Compromise: Forever 21’s 2023 breach exposed sensitive information belonging to over 539,000 current and former employees, including bank account and Social Security numbers.
• Repeated Targeting: Neiman Marcus suffered multiple breaches, affecting 4.6 million customers in 2021 and leaking data of 65,000 customers in 2024.

Key Vulnerabilities in Retail Cybersecurity

While the retail attack surface is broad, several key vulnerabilities deserve particular attention from cybersecurity leaders:
 

Vulnerable Point-of-Sale Systems

POS terminals remain prime targets for cybercriminals. Forever 21’s 2017 breach illustrates this perfectly. After network infiltration, cybercriminals installed malware on POS systems across multiple stores. Despite having encryption technology, it wasn’t consistently activated, highlighting how human error undermines technical safeguards.
 

Supply Chain and Third-Party Risks

“A major blind spot for retailers is the complex web of vendors and partners that power operations behind the scenes,” notes Lindley. “When even the smallest supplier’s credentials are compromised, the fallout can reach the heart of your entire network.”
The Target breach that began with a third-party HVAC contractor remains the most notorious example of this vulnerability in retail cybersecurity.
 

Credential Theft

According to Verizon, stolen credentials accounted for 38% of hijacked data from retailers last year. Once cybercriminals obtain valid credentials, they can move through networks while appearing as legitimate users. Multi-factor authentication, though essential, is not universally implemented across retail organizations.
 

Strategic Priorities for Retail Cybersecurity

Protecting today’s retail environment requires a multi-layered approach addressing both technical and human vulnerabilities:

1. Adopt a Zero-Trust Architecture

Traditional security models that trust anything inside the network perimeter no longer suffice. Retailers should implement zero-trust principles that verify every user, device, and transaction regardless of location.

2. Secure Your Supply Chain

Given the dramatic increase in supply chain breaches, retailers must:

• Conduct thorough security assessments of all vendors
• Establish clear security requirements in contracts
• Develop incident response plans that include third-party scenarios
• Implement secure access controls for external partners

3. Prioritize POS Security

Point-of-sale security requires special attention, including:

• Regular security audits and penetration testing
• Consistent encryption of all transaction data
• Segmentation of POS systems from other networks
• Timely software updates and patch management

4. Focus on Human-Centered Cybersecurity

Jeff Le, Managing Principal for 100 Mile Strategies LLC, emphasizes that “an emphasis on culture and training at every level is an essential aspect of any effective cybersecurity strategy.” This human element is particularly important in retail, where employees at all levels interact with systems containing sensitive data.
 

Building Resilient Retail Cybersecurity

As cybercriminals continue targeting the retail sector with increasingly sophisticated attacks, security leaders must take decisive action. Lindley concludes: “As AI-driven attacks and advanced pretexting become more commonplace, retailers need adaptive, forward-looking security strategies. Zero-trust architectures, continuous employee training, and real-time threat monitoring aren’t optional—they’re the foundation for safeguarding customer trust and business resilience.”
 

Retailers: Improve Your Cybersecurity Measures

Download our comprehensive report “Digital Shoplifting at Scale: Human Cybersecurity for the Retail Sector” to gain:

• Frameworks for implementing zero-trust architecture in retail environments
• Supply chain security assessment tools and third-party risk management strategies
• Guides for securing point-of-sale systems and payment infrastructure
• Approaches to build retail cybersecurity awareness across your organization
• ROI models for justifying cybersecurity investments to retail leadership

Protect your retail organization from today’s sophisticated cyber threats with managed security services designed specifically for the unique challenges of the retail sector.
About NINJIO
NINJIO reduces human-based cybersecurity risk through engaging training, personalized testing, and insightful reporting. Our multi-pronged approach to training focuses on the latest attack vectors to build employee knowledge and the behavioral science behind human engineering to sharpen users’ intuition. The proprietary NINJIO Risk Algorithm™ identifies users’ social engineering vulnerabilities based on NINJIO Phish3D phishing simulation data and informs content delivery to provide a personalized experience that changes individual behavior.