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Retail is more digital than ever—online shopping, digital wallets, and frictionless checkouts are now standard. But as convenience grows, so do cybersecurity risks. Retailers face escalating threats like identity theft, account takeovers, and payment fraud, all while navigating evolving regulations and customer expectations for privacy.
The challenge? Strengthening security without disrupting the shopping experience.
From secure authentication to fraud prevention and data protection, modern cybersecurity strategies help retailers defend against attacks while maintaining a seamless experience for customers. This guide explores the biggest threats in retail and how businesses can stay ahead of evolving cyber risks.
Main points
Retail is a prime target for cybercrime – The industry handles vast amounts of sensitive data, making it attractive to attackers exploiting identity theft, credential stuffing, and payment fraud.
Weak authentication is a major vulnerability – Password-only logins expose retailers and customers to breaches. Stronger authentication methods like MFA and passwordless logins are essential.
Third-party integrations introduce risk – Payment processors, marketing tools, and customer service platforms can be weak points if not properly secured, making vendor security crucial.
Security must align with convenience – Customers expect seamless shopping experiences. Effective cybersecurity protects without adding friction, ensuring trust and compliance.
Common retail cybersecurity threats
The retail industry is a prime target for cybercrime, with one in ten cyberattacks directed at businesses in this sector. This is largely due to the industry’s size, the vast amount of sensitive customer data it handles, and the security vulnerabilities that come with managing complex digital operations.
In cybersecurity, threats refer to both the attackers (cybercriminals) and the methods they use (attack vectors), while vulnerabilities are the weaknesses that these threats exploit to gain access to systems or data.
Some of the most common threats and vulnerabilities retailers face include:
Identity theft and account takeover – Threat actors exploit tactics like credential stuffing, phishing, and synthetic identity fraud to steal login credentials and gain unauthorized access to user accounts. Once inside, they can make fraudulent purchases, drain stored payment methods, or even lock out legitimate users.
Weak authentication methods – Outdated login systems relying only on passwords make it easier for attackers to breach accounts. Without multi-factor authentication (MFA) or adaptive security measures, businesses are more vulnerable to brute-force attacks and credential theft.
AI-driven cyberattacks – Attackers are using artificial intelligence (AI) to refine their tactics, making scams harder to detect. Deepfake voice and video technology can impersonate executives or customer support agents, tricking employees or customers into sharing sensitive information. Additionally, we’re on the cusp of AI-powered bots enhancing credential stuffing attacks by automating and optimizing password-cracking attempts.
Fraudulent transactions and related risks – Cybercriminals exploit vulnerabilities in payment platforms to steal financial information or manipulate transactions. Identity-based fraud is especially prevalent in emerging payment models like Buy Now, Pay Later (BNPL), where fraudsters use stolen or synthetic identities to make purchases with no intention of repayment.
Retail businesses are also vulnerable through the third-party platforms and software they rely on to power their shopping experience. Payment processors, marketing integrations, and customer service tools can introduce security gaps if not properly vetted and monitored. A breach in any of these systems can compromise customer data, even if the retailer’s own security measures are strong.
These ever-evolving risks underscore the critical role of strong authentication in retail. A secure, seamless authentication process not only protects against fraud but also reassures customers that their data is being handled responsibly.
But security alone isn’t enough—retailers must also account for growing demands for privacy and transparency from both customers and regulatory agencies.
Meeting regulatory and customer expectations
As noted above, another major concern in retail cybersecurity is meeting regulatory demands and customer expectations with respect to data privacy and transparency. This is especially true for retailers working internationally: In these cases, multiple countries’ regulations apply simultaneously.
The EU’s General Data Protection Regulation (GDPR) defines certain rights of data subjects that need to be protected, and it is notorious for strict enforcement on retail and other industries that fail to comply. Certain states within the US have more stringent protections than others; the California Consumer Protection Act (CCPA), modeled on the GDPR, demands that businesses uphold similar rights-based protections.
Another element is regulation based on industry norms. The Payment Card Industry (PCI) Data Security Standards (DSS) are not government-based, but they nonetheless carry consequences for businesses that fail to uphold them. And, with recent updates, the impact of PCI DSS 4.0 on customer authentication is impossible to ignore. Building on prior versions, PCI now imposes stricter authentication controls, requiring always-on MFA to access sensitive payment data.
Customer expectations underlie all explicit compliance requirements. Non-compliance comes with direct penalties in the form of fines and seizure of business, but the indirect impacts of reputational damage can be far worse over time. Customers prefer retailers they can trust.
CIAM’s role in securing the customer experience
Given the centrality of customers and their data in many of the threats above, cybersecurity in the retail industry revolves around keeping customers’ data safe. To that effect, Customer Identity and Access Management (CIAM) is a framework designed to protect users from the moment they create accounts to every login and transaction they make.
One central pillar of CIAM is reducing reliance on passwords and central databases which are frequent targets for attackers. This is achieved through:
Passwordless authentication – Passkeys, magic links, social logins, and similar methods leverage user devices and trusted platforms to authenticate users without requiring passwords, reducing both security risks and friction.
Adaptive MFA – MFA strengthens security by requiring at least two verification factors instead of just a password. The most effective MFA implementations use adaptive authentication, which adjusts security measures based on risk—blocking suspicious activity without disrupting legitimate customers.
Single sign-on (SSO) for omnichannel retail – This approach enables seamless login across apps, websites, and loyalty programs from a single secure point of entry.
These are far from the only methods an impactful CIAM platform can employ. The best solutions are tailored to the retailer’s tech ecosystem and customer experience, integrating smoothly with other platforms customers interact with, from payment processors to loyalty programs.
Just as important, CIAM should enhance security without creating unnecessary friction. Customers should be able to move through digital storefronts easily without worrying about security in the background.
In other words, CIAM should protect users without preventing them from being customers.
Educating customers on secure shopping practices
Customer security should not come at the cost of a seamless user experience. Shoppers want to browse and buy without hurdles, so security guidance should be effortless and well-timed rather than feeling like mandatory training.
Retailers can weave in security awareness without disrupting the experience. Instead of making onboarding more complex, subtle nudges—like a quick post-login prompt saying, “Passkeys are faster and more secure. Want to try one?”—can encourage safer authentication without friction.
Similarly, security reminders can appear naturally during key moments. A brief message near checkout or in account settings can highlight common scams, such as fake customer service messages or misleading discount offers. These quick interventions help customers stay alert without overwhelming them.
By keeping security guidance lightweight, contextual, and unobtrusive, retailers can help customers shop safely without making security feel like a chore.
Also read: How to Spot and Stop Socially Engineered Attacks in Retail
The role of CIAM in retail cybersecurity
Ultimately, investing in identity security reduces the likelihood and potential impact of fraud, boosting customer trust. Doing so through a robust retail CIAM platform has the added benefit of maximizing protection while minimizing friction, letting customers shop without worrying about security risks.
The benefits of CIAM-based cybersecurity in the retail industry include but are not limited to:
Fewer successful cyberattacks such as social engineering, credential stuffing, and other cyberattacks
Fewer password-related issues, like customers forgetting passwords or getting locked out of accounts
Simplified and secure account management with greater visibility into data sharing and user permissions
Seamless compliance with evolving regulatory requirements and industry standards
A smoother, more user-friendly experience for browsing, shopping and other interactions
Transferable privacy skills that help customers stay secure across various platforms, building brand loyalty in the process
This all amounts to happier customers who are empowered to shop swiftly and easily.
AI, biometrics, and decentralized identity are shaping the future of authentication and security across all industries. More and more companies need to contend with cyber threats even if their operations are primarily brick-and-mortar based. Giving customers options to browse products and understand more about a brand online allows for greater accessibility, but it comes with additional risks related to infrastructure vulnerabilities and evolving threats.
To contend with these, retailers can implement simple yet secure identity and access management systems to safeguard their digital storefront and customers effectively and efficiently. The best solutions meet customers where they are across desktop, web, and mobile applications. Solutions also must seamlessly work and scale with retailers’ internal tech stacks and any partnered or linked ecosystems.
Discover more: Authentication in Ecommerce: Best Methods & CIAM Tips
Stringent CIAM for steadfast cybersecurity in retail
In retail, where digital transactions and customer data intersect constantly, strong authentication isn’t just an option—it’s essential.
The Descope CIAM platform is built to meet the unique security needs of retailers while maintaining a seamless shopping experience. With intuitive, developer-friendly tools, retailers can implement advanced authentication methods such as passwordless logins, adaptive MFA, and risk-based authentication—without adding friction for customers.
Sign up for a Free Forever account with Descope and drag and drop your retail customer journey flows. Have questions about our platform? Book time with our auth experts.
