The Complete Guide to Data Security for Omnichannel Retailers

The retail sector is rapidly digitizing. As consumers push for seamless online experiences, many retailers have embraced an omnichannel approach to marketing and sales. Retailers are considered omnichannel when they incorporate several different methods of shopping such as an online shop, a physical store and excepting phone sales. While this shift has many business advantages, data security for omnichannel retailers often falls short — and retail cyber attacks grow.

Omnichannel strategies aim to provide a consistent experience across in-store, social media and online shop interactions on all devices. Businesses employing them retain 89% of their customers, so omnichannel is quickly becoming the norm. However, these strategies’ cybersecurity challenges become more concerning as retail data security issues rise.

The Challenge of Data Security for Omnichannel Retailers

Cybersecurity is a growing concern for all retail operations. In 2020, 24% of all cyber attacks targeted retailers and it’s easy to see why. The sector holds highly sensitive data like credit card information and customer PII, but many retailers are unfamiliar with cybersecurity best practices. The rise of omnichannel heightens these concerns.

Providing a seamless experience across all platforms requires substantial data collection. Stores may collect names, locations, financial information, shopping trends, browsing history and more for every customer across each device. All that data under one organization’s roof presents a tempting target for cybercriminals.

Balancing this data collection with security can be complicated. While 71% of consumers expect personalization for easier shopping experiences, customers also say they value privacy. As cybersecurity and data collection issues have become more prominent, shoppers are more likely to switch brands over security concerns.

Omnichannel businesses must collect enough data to enable seamless, personalized experiences but keep this information safe from the rising retail cyber attacks. Maintaining this balance is challenging, but it’s critical. If omnichannel data isn’t secure, the resulting breaches could be considerable in size and cost.

How to Secure Omnichannel Data

Data security for omnichannel retailers is intimidating, but it is possible. Here’s how retailers can improve their protections while still enabling these experiences.

Rethink Data Collection Practices

The first step to better omnichannel retail data security is slightly counterintuitive — collect fewer data. While gathering customer information is a central part of the omnichannel process, retailers may get more than they need. Businesses should rethink what they consider necessary information and stop holding anything not mission-critical.

Names, shopping history and ad preferences are likely crucial to a business’s omnichannel strategy. However, addresses, phone numbers, income and other details may not be helpful enough for personalization and streamlining to be worth the risk.

Collecting only the most essential metrics will make retailers less of a target for cybercriminals. It could also improve user perceptions of the business, as 68% of U.S. adults are concerned about how much data companies collect.

Use Encryption and Tokenization

Retailers should also encrypt the information they do collect. Leaving omnichannel data in a readable state is far too risky considering how fast retail cyber attacks are growing. While encryption won’t necessarily prevent information leakage, it could mitigate its impact.

Given the level and sensitivity of omnichannel data, retailers should use advanced encryption methods and apply them everywhere. That means encrypting user metrics both at rest and in transit. Retailers should also favor point-to-point encryption above end-to-end encryption for its added standards.

Tokenization can provide similar benefits. Businesses can convert payment information into encrypted tokens to avoid leaving the most sensitive data vulnerable to interception. Swapping sensitive information for substitutes during transactions can help ensure companies’ data collection and cross-platform communication don’t jeopardize consumers’ privacy.

Strengthen Authentication

Reliable data security for omnichannel strategies also requires more robust authentication controls. This is one area where omnichannel’s cross-platform operations are actually a strength rather than a vulnerability. Providing a consistent login and authentication experience across every channel can make it easier to verify users’ identities.

Single sign-on (SSO) is one of the best authentication methods for omnichannel operations. With the proper protections, SSO can be much more secure than multiple passwords and usernames, thanks to its focus on quality over quantity. It also makes authentication seamless for users, upholding omnichannel’s ease-of-use benefits.

Omnichannel retailers could also implement behavioral biometrics with so much information about how customers use different platforms. Machine learning algorithms could analyze this data to learn how users act, making it easier to highlight potential breaches.

Restrict Data Access

Another important part of omnichannel retail data security is restricting access privileges. While these strategies may require several apps to share data, that doesn’t mean the same should be true for employees.

Omnichannel’s multi-platform accessibility already presents enough vulnerabilities, so businesses should minimize further risks by restricting user access. Not every employee or department needs to see every piece of information. Restricting access based on the principle of least privilege will help reduce lateral movement risks should a cybercriminal compromise one account.

Zero-trust architecture can help enforce these restrictions. It shouldn’t just be discouraged for people to access data outside their work scope — it should be impossible. Segmentation, tight controls and user authentication are crucial.

Educate Users and Workers

Omnichannel retailers should inform all users about data security risks and controls, including employees and customers.

The retail and wholesale industry saw a 436% rise in phishing attacks in 2021 — more than any other sector. Because these attacks rely on misjudgment and other human errors, more thorough training is a critical security measure. Omnichannel businesses must train all employees with data access on security best practices, including how to spot phishing attempts.

It’s also good to tell customers what data a business collects and why. Following that, companies should let users customize their security and privacy measures in light of relevant risks. These steps will help consumers be more mindful of their data and how they share it, reducing error-related risks on their end.

Omnichannel Raises Retail Data Security Concerns

It’s difficult to overstate the importance of data security for omnichannel retailers. As more companies adopt these strategies and collect more user data across platforms, they must implement better security controls.

These five steps can help improve retail data security in any context but are particularly critical for omnichannel strategies. Following these measures can help businesses capitalize on omnichannel’s potential without raising their data privacy risks.