Hacker attack on Media Markt and Saturn
Possible long-term effects on channel management
The hacker attack on the retail giants Media Markt and Saturn is certainly the biggest accident that a retailer can imagine. Due to the extensive failure of the stationary business, which lasted around a week, during an extremely important season, the important year-end business for Media Markt and Saturn as well as for industry has been massively influenced. Although online-only business does not appear to be affected, this attack still has an impact. Because the strategic advantage of click-and-collect in the market compared to pure online players is also gone for the time being.
Causes of the Hacker Attack
An attack of this type has certainly been extensively planned and implemented. Both the timing and the scope are not accidental. This will maximize the pressure on Media Markt and Saturn. However, planning is only one side of the coin. The other is vulnerable infrastructures without adequate safety networks or redundant systems, which can at least ensure a defined emergency operation in the critical areas. After all, the encryption of servers and the extortion of ransom is not a new phenomenon among digital gangsters. It has been practiced in this form for several years.
The security of the IT infrastructure may have suffered here recently due to other priorities. The lockdown due to Corona, the current delivery bottlenecks, the shift towards online business and extensive organizational changes have certainly and will continue to require a lot of resources and management focus. And IT security unfortunately does not generate any sales. As understandable as this is, unfortunately the consequences are fatal.
Short term effects
The obvious short-term effects are clear: brick-and-mortar sales may have slumped very badly. Deliveries of goods are accepted – if they could no longer be stopped by the supplier – but are not booked in the systems. No reorders were made. Everyone involved, whether at Media Markt and Saturn, in industry or in distribution, tries to minimize the damage. To what extent this will succeed is unclear. It is clear, however, that the planned sales in this channel will be negatively influenced in the Christmas season. The scope depends on how much sales were actually lost during this period, how quickly the systems are fully operational again, how quickly the related process issues – including ordering and delivery processes – are back to normal operation and how quickly the customer can get to the POS returns.
Medium term reactions
For the industry, the additional question for the rest of the Christmas business is how and where can this loss of sales be offset. Where will the end customer ultimately shop? If the purchasing volume shifts to the online offers from Media Markt and Saturn, to other online retailers, or if the few remaining stationary retailers benefit. And of course the question arises as to how Media Markt and Saturn react to potential changes in the flow of goods and channel marketing activities?
All questions with no simple answers. In particular, of course, taking into account the fact that the exact information situation, especially the real effects on sales for industry, is still very unclear. Once again, it is important to make the best possible decisions with incomplete information. Get the best out of the difficult situation in coordination with those responsible at Media Markt and Saturn or focus more on activating other channels in combination?
Of course, both good sales relationships in all channels and the necessary database for intelligent management are important here. This means that at least part of the uncertainty can be resolved on the basis of data.
While in the short and medium term it is a matter of absorbing sales and getting back into “normal Christmas mode”, completely different questions arise strategically. Some possible ones could be:
Will Media Markt and Saturn solve this security problem in such a way that such a massive failure no longer occurs? Can I possibly even have a positive influence on my sales compared to my competitors by working more closely with Media Markt and Saturn? How much potential do alternatives offer that I have not yet developed compared to the competition? How do I change my goods distribution strategy towards systems that only react to real customer demand, i.e. replenishment taking allocation into account?
How do you see the situation in the long term? We would be happy to discuss the situation with you from the perspective of an expert in data and efficient sales processes.
By the way: we had the same problem a few years ago. An email link encrypted our servers. Thanks to our experts and our multiple redundant system architecture, the problem was limited to a few servers and resolved within a few hours. The impact on our customers was minimal.