Cyber a growing threat for mid-sized retail and FMCG businesses
Digitalization is increasingly on the agenda at mid-market organisations. Yet while many see it as a strong revenue stream for future growth, the additional costs associated with digital – including cybersecurity – cannot be ignored. Given the relatively weak market conditions for mid-market retailers, additional costs could create strategic uncertainties.
Cybersecurity continues to be a significant area of concern for organizations, as adversaries become increasingly sophisticated while defense capabilities are often behind threat development. While businesses benefit from digital technologies, the costly downside of extensive digitization is becoming increasingly clear – particularly for mid-market players, whose resources may already be stretched thin.
As part of the consultancy’s mid-market focus, BDO recently analyzed how the segment is faring in relation to cyber threats. The firm’s research is based on a survey 300 CEOs, CFOs and COOs from the mid-market retail industry.
The mid-market retail segment continues to be in a period of uncertainty, with 37% of respondents to BDO’s Retail Rationalized Survey saying that they are thriving, 54% saying that they are merely surviving, and 9% reporting that they are struggling. A sector view shows a different story, with some, such as the pure-play segment, having an 84% "thriving" rate, while others, such as department stores, having a more difficult time, with 29% in the "surviving" segment.
The firm adds that current trends will continue to see businesses seek to transform their operations to be more digital – 59% say that they are making intentional steps toward a clearly defined strategy, while 16% say that they are experimenting, testing, and learning; a further 22% say that they are placing smart bets and focusing on low-hanging fruit; and 3% say that digital is part of their current businesses core.
While digitalization is set to become increasingly important, the BDO report notes a need for increased data security as more and more identifiable information comes online, increasing the odds of identity theft and financial loss. However, the trying financial circumstances of many mid-market bricks-and-mortars means that security takes a back-seat, with considerable risks to the business and consumers. This creates major concern among stakeholders, including investors and regulators.
The firm writes, “With access to sensitive customer data, the retail industry is a prime target for cyber-attacks. In the past decade, the retail industry has undergone major shifts worldwide due to the rise of the internet… Although this increased reliance on the internet has begun a new chapter for the retail industry, it has also opened the door to ample vulnerabilities for cybercriminals. Financial information – especially credit card numbers – are considered a highly lucrative reward of a successful cyber-attack because they can be quickly monetized on the Darknet.”
