In a recent study involving 117 senior retail executives in the UK, it was found that 11% admit they are unprepared for cybersecurity threats.

Cybersecurity has been identified by 58% of retail leaders as one of the top three risks for the industry in the upcoming year, reflecting a heightened awareness of dangers like ransomware, data breaches, and system failures.

This growing concern has prompted retailers to increase their investments in cybersecurity, with 64% intensifying their efforts in this area over the past year. Initiatives include upgrading systems, reviewing response plans, and incorporating security measures throughout supply chains.

The research also highlights the increasing complexity and interconnectedness of risks. The top 30 UK-listed retailers revealed 278 principal risks, including 40 new or escalating concerns in the last year, with cyber-related issues making up 25% of these emerging risks.

In April, Marks & Spencer halted online and app orders due to a major cyberattack, predicting an operational profit impact of approximately £300 million for the fiscal year 2025/26 before implementing any mitigation strategies.

Moreover, The North Face faced a “small-scale credential stuffing attack,” which led to customer notifications.

Retail Economics’ CEO, Richard Lim, stated, “Cyber threats are no longer just an IT issue. They cut to the heart of customer trust, brand reputation and operational continuity. It’s concerning that so many retailers still lack the confidence and capability to respond effectively. Resilience today isn’t just about protection. It’s about being ready to act, recover quickly and adapt at speed.”

Lim added, “The most forward-thinking retailers are using cyber risk as a catalyst for broader transformation. They are accelerating investment in digital infrastructure, strengthening internal agility, and embedding resilience across their operations. These are the bold decisions, made under pressure, that will shape long-term success.”

Financial Challenges

Aside from cybersecurity concerns, retailers are also facing significant financial challenges, with an anticipated £6.5 billion rise in operating costs in 2025.

This surge is attributed to factors such as increased National Living Wage rates, higher Employer National Insurance contributions, business rates, utilities, and property expenses.

The study revealed that average pre-tax profit margins plummeted from 10.4% in 2014 to 5.7% in 2024, resulting in a loss of over £7.3 billion in pre-tax profits across the sector.

In response to these financial pressures, retailers are focusing on cost control while simultaneously investing in technology, data analytics, and strengthening their supply chains.

The gap in resilience among retailers is becoming increasingly evident. While some believe they are ‘ahead of the game’ in risk management—rising from 26% to 28%—the percentage of those falling behind has grown more substantially, from 21% to 25%.

A significant majority (58%) of retail leaders recognize that the performance gap between top-performing and underperforming businesses is widening.

Karen Johnson, head of Barclays UK Corporate Banking for retail and wholesale, remarked, “As operational and financial risks continue to escalate, it’s clear that embracing technological advancements and enhancing cybersecurity measures will be key to building resilience for UK retailers.”