Sophos' sixth annual State of Ransomware in Retail report found that 62% of ransomware attacks against retail organizations resulted in data encryption in 2026, up from 48% the previous year and above the 56% average across all sectors surveyed.

The findings are based on responses from 217 IT and cybersecurity leaders at retail organizations that experienced ransomware attacks during the preceding 12 months. The survey was conducted between January and March 2026.

Despite higher encryption rates, retailers reported faster recovery times and smaller ransom payments. However, the average cost of recovering from an attack increased to $1.76 million, compared with $1.65 million in 2025.

Phishing leads technical causes of attacks

Phishing was the most frequently reported technical root cause of ransomware attacks against retailers, accounting for 29% of incidents. Exploited vulnerabilities followed at 26%, while malicious email accounted for 22%.

Retail recorded the highest rate of attacks originating from exploited vulnerabilities among all sectors surveyed, compared with an 18% cross-sector average.

Identity-based attack methods, including phishing, malicious email, compromised credentials and brute-force attacks, collectively accounted for 69% of ransomware incidents involving retailers.

Known security gaps were the most frequently cited operational cause of ransomware incidents. According to Sophos, 38% of respondents attributed their attacks to security weaknesses their organizations had previously identified but had not addressed.

Data encryption and theft increase

The percentage of retail ransomware attacks resulting in data encryption increased by 14 percentage points from 2025, reversing two consecutive years of declines.

Incidents involving both data encryption and theft also increased, rising from 14% in 2025 to 19% in 2026.

Retail organizations increasingly relied on backups to restore encrypted information. The report found that 71% recovered data using backups, compared with 62% the previous year and 66% across all sectors.

Ransom payments remain below other sectors

The median ransom demand received by retail organizations was $225,000, the second lowest among surveyed sectors and substantially below the $698,000 cross-sector median.

However, the average ransom demand in retail reached $4.32 million, the highest among all sectors.

The median ransom payment made by retail organizations was $57,500, the lowest of any sector and below the $769,000 cross-sector median.

Recovery times improve as costs rise

The average time required to fully recover from a ransomware attack declined from 3.16 weeks in 2025 to 2.54 weeks in 2026, below the 2.80-week average across all sectors.

More than half of retail respondents, 56%, reported recovering within one week, the highest percentage recorded in five years of retail survey data.

Recovery expenses nevertheless increased. The average cost of recovering from an attack, excluding ransom payments, rose to $1.76 million from $1.65 million in 2025.

Security controls face challenges

Among retail organizations affected by credential-based attacks, 97% had multifactor authentication enabled. Nevertheless, more than half experienced data encryption.

Firewalls identified 59% of attacks before ransomware deployment. Despite those detections, attackers successfully encrypted data in 60% of the incidents, compared with 50% across all sectors.

Sophos recommends greater coordination among identity protection, email security, endpoint protection and network controls to improve ransomware defenses. The company also identifies addressing known security gaps as a priority for retailers.

Download the full report here.