retail news in context, analysis with attitude

The Financial Times reports that Sears-owned Kmart "has become the latest retailer to fall victim to a cyber attack, saying that it had lost credit and debit card data," and has reported that while it knows that the breach "probably started in early September," it does not know the extent of the breach.

According to the story, "The news comes soon after it was revealed that cyber attacks are costing companies almost double the amount they were four years ago – as businesses find they have to spend more on informing customers, cleaning up their computer systems, and coping with disruption to their trade." The Kmart breach is said to be along the same lines of hacking incidents that affected companies such as Home Depot and Target.

The FT story notes that Kmart's president, Alasdair James, says that "he cyber breach was detected on Thursday and was being investigated with the help of a leading security company, federal law enforcement agencies and banking partners," and that Kmart's systems were breached by malicious software that is “undetectable by current antivirus systems."
KC's View:
The good news is that the extent of the Kmart breach is likely not to affect nearly as many customers as the other breaches, for the simple reason that pretty much nobody shops at Kmart anymore.

The bad news is that, based on the way Kmart operates, its idea of computer security probably is to post four guys with bayonets outside a room full of IBM mainframes, and its idea of antivirus procedures is to take four aspirins.

I'm not kidding here.

There was a Crain's Chicago Business story over the weekend about the disaster that is Kmart, reporting that "The once-venerable retailer had been foundering for years when Sears CEO Edward Lampert plucked it out of bankruptcy in 2002 and merged it with Sears in 2005. But the chain's performance has worsened in recent quarters because of increased competition and Mr. Lampert's refusal to pump money into Kmart's 1,077 stores … Kmart's sales will sink to around $12 billion this year, compared with about $18 billion at Sears stores, according to estimates by Gary Balter, a New York-based analyst at Credit Suisse … Some perspective: In 2000, Kmart Corp. had nearly $36 billion in sales, while Sears Roebuck & Co. generated $40 billion."

In other words, Kmart and Sears are suffering from a near total lack of relevance.