The Corporate Exodus: Why Multinational Brands Are Secretly Leaving the Middle East

On a Monday morning in early March 2026, the leadership team of the Chalhoub Group personally visited the Dubai Mall lobby to see how the employees who had consented to come in were doing. In Jordan, Saudi Arabia, and the United Arab Emirates, store attendance was made “voluntary”—a term that conveys a sense of the mood. The shops in Bahrain were just shut down. The vice president of communications for Chalhoub, which runs 900 stores in the area for companies ranging from Versace to Sephora, sent a cautious and measured message: employees who felt at ease came in. The others remained at home. They were not held accountable.

In just a few days in early March, the escalation of the US-Iran conflict had a significant impact on the retail economy in the Middle East, as that scene illustrates. Over the weekend, the US-Israeli air campaign grew. Tehran retaliated by firing drones and missiles at Gulf states. One of the most famous five-star hotels in Dubai, the Fairmont Palm, was hit by a missile. Airports fell silent. Supply networks came to an end.

Kering, the French luxury conglomerate that owns Gucci, suspended all business travel to the region and temporarily closed its stores in the UAE, Kuwait, Bahrain, and Qatar. Amazon suspended regional deliveries, closed its fulfillment center in Abu Dhabi, and told workers in Saudi Arabia and Jordan to stay inside. Apple shut down its stores in Dubai until Thursday. H&M closed its stores in Israel and Bahrain. Reckitt sent all of its regional workers to work from home after closing its manufacturing facility in Bahrain.

The reaction from the stock market was almost instantaneous. Three of the biggest luxury conglomerates in the world, LVMH, Hermès, and Richemont, saw their shares drop between 4% and 5.7% in a single afternoon session as investors attempted to determine their exposure. It sounds modest, but between 5% and 10% of the world’s luxury spending comes from the Middle East. The trajectory was what was concerning.

In 2024, when handbag sales in Europe and China were stagnating, the region was dubbed “luxury’s brightest performer” by consultancy Bain. In January, the chief financial officer of LVMH declared that the Middle East was “displaying significant growth.” The computation was now completely different. The regional travel retail market is worth between $5 and $6 billion, according to Victor Dijon, a senior partner at Kearney. He stated that hundreds of millions of dollars were “definitely at risk” if airports were closed for a month.

The companies that were taken by surprise had a sincere interest in the growth narrative of the area. Days before the first strikes, Cartier had opened a high-end jewelry exhibition in Dubai’s Keturah Park. Less than a month prior, Louis Vuitton had held an exhibition at the Jumeirah Marsa Al Arab hotel. The first Saudi beauty brand was recently introduced by Sephora. The British low-cost clothing company Primark has announced that it will open three stores in Dubai in March, April, and May. By year’s end, Bahrain and Qatar will follow. The company was “monitoring the situation closely,” a representative told Reuters.” That sentence had the deliberate feel of a plan undergoing revision.

However, even though the fighting was destructive, it sped up a process that was already underway before any bombs were dropped. Carrefour’s withdrawal from some Gulf markets, which sparked a lot of debate in the area a few months prior, was a precursor to a larger trend that analysts had been quietly monitoring. The National’s business editor Salim Essaid had pointed out that while geopolitical risk and boycotts related to Palestine were factors for some brands, they weren’t the only reasons for the retail exits.

Cost was a major concern for many distributors. For others, it was about a change in market share that they had not fully expected. “Consumers are increasingly turning their backs on big-name internationals and favouring local brands, home-grown experiences and practices that resonate with their regional identity,” Aarti Nagraj wrote for The National. According to John Katsos, a professor at the American University of Sharjah, local players gained ground by being more receptive to what the region truly wanted rather than what Western brand playbooks assumed it should want. This change was occurring across industries, not just retail.

The business community in the Middle East is actively debating the bigger question this raises, which is whether the region still needs multinational brands in the same way as it once did. The response appears to be moving in the direction of “not as much,” at least in some categories. Where Western brands have retreated, Chinese and Russian brands have increased their market share. Local e-commerce, food, and fashion startups have achieved significant scale. In industries that were previously dominated by foreign players, Saudi Arabia’s Vision 2030 has purposefully produced domestic champions. According to Katsos, the multinational corporations that are able to adapt to local contexts instead of just importing a global template and hoping it will work are the ones that will endure and expand.

A tension that was already there was abruptly and dramatically expressed by the conflict. Companies that had made significant investments in the region’s growth story were forced to close stores and halt operations in markets they had been expanding into the week prior, calculating risk in hours rather than quarters. It will be crucial to determine whether the Middle East’s ten-year run as a draw for foreign investment recovers or recalibrates into something smaller, more selective, and possibly more authentically local than what came before.