More Data Breaches in Store for US Retail Industry

US retail businesses are under increasing attack by cybercriminals and the number of data breaches affecting this industry are on the rise, according to a new study from Thales eSecurity and 451 Research.

The report, "2018 Thales Data Threat Report -- Retail Edition," finds that 50% of the US retail respondents reported at least one breach in 2017, which is greater than the overall global average (about 36%) and second only to the US federal sector (57%).

That 50% number is also greater than the global retail average, which stands at 27%. Additionally, nearly 75% of US retailers report that they have experienced at least one breach in the past year, compared to 60% of global retailers.

As if to emphasize the point, earlier this year, Panera Bread, Hudson Bay and Under Armour all announced that their systems were breached within a two-week span. (See Massive Data Breaches & Data Leak Hit Retail Industry in 1-2-3 Punch.)

The report is based on responses from 100 senior retail IT security managers in the US, along with 96 IT security managers from retailers in other countries.

(Source: creative Commons)

In addition to the other results, 49% of US respondents report that that they are "very" and "extremely" vulnerable to attacks on sensitive data, compared to the global retail rate of 35%.

This may be what causes an uptick in security spending.

Of the all the US respondents, 84% report that their organizations will increase IT security spending this year, which is up sharply from last year (77%) and higher than both the global average (78%) and global retail (67%). More than a quarter of both US retail and Global retail (28%) report that their spending this year will be "much higher."

However, the report finds retailers have obstacles to solving these problems. The lack of perceived need is the top barrier (52%) followed by impacts on business performance (47%) and perceptions of complexity (46%).

How retail is responding to the threat is somewhat scattered. While analysis and correlation tools were ranked as the most effective way of dealing with data breaches (91%), spending plans are highest for endpoint and mobile defense tools, despite their being ranked as the least effective defenses.

Further confusing the issue, defense of data-at-rest (57%) and data-in-motion (62%) defense were ranked at the bottom of spending priorities for US retail, despite having much higher results for effectiveness.

The report found that the drivers for IT security spending could be associated with certain areas. The increased use of cloud was the top driver at 49%, which is above the global average of 39%. This is followed in US retail by avoidance of financial penalties (45%) versus a global average of 39% -- and reputation and brand protection -- 33% for US retail.

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Compliance declined as a strong driver of spending on IT security in US retail: 23% versus 37% global average and 41% global retail.

However, at the same time, 83% of the US retail respondents felt compliance requirements are "very" and "extremely effective" in preventing breaches, compared to a 64% global average and 65% for global retail. Compliance focuses on specific data sets, such as credit card information, and they may lag real-world threats faced by IT.

In its conclusion, the report looks into the demonstrable cloud adoption by retail and recommends that the sector change its priorities:

"With increasingly porous networks, and expanding the use of external resources (SaaS, PaaS, and IaaS most especially) traditional endpoint and network security are no longer sufficient, particularly for heavy adopters of public cloud resources such as the US retail sector. When implemented as a part of the initial development (for ease of implementation versus retrofitting at a later date), data security offers increased protection to known and unknown sensitive data found within advanced technology environments like cloud, containers, Big Data and IoT. Retail organizations should consider moving beyond compliance and adopting security tools such as encryption or tokenization."

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— Larry Loeb has written for many of the last century's major "dead tree" computer magazines, having been, among other things, a consulting editor for BYTE magazine and senior editor for the launch of WebWeek.