Major international brands are temporarily closing stores or scaling back operations across the Middle East as escalating conflict in the region severely disrupts travel, retail activity, and consumer confidence.
In Dubai and other major commercial hubs, several stores have either shut their doors or are operating with reduced staff as tensions intensify following a wave of military escalation.
Escalating Conflict Shakes the Region
The US–Israeli air campaign against Iran intensified this week, prompting retaliatory missile and drone attacks by Tehran targeting Gulf states. The weekend bombardments reportedly resulted in the death of Iran’s Supreme Leader and dozens of civilian casualties, including victims of a strike on a girls’ primary school.
As missile fire reached parts of the Gulf, including an incident that damaged the five-star Fairmont The Palm in Dubai, governments moved swiftly to close airspace and tighten security. The closures abruptly halted tourism flows — a critical pillar of the region’s luxury retail sector.
Luxury Groups Respond
The Dubai-based Chalhoub Group, which operates around 900 stores for brands including Versace, Jimmy Choo, and Sephora, confirmed that its stores in Bahrain were closed. In other markets — including the United Arab Emirates, Saudi Arabia, and Jordan — stores remain open but are staffed only by employees who volunteer to work.
Senior executives from Chalhoub personally visited Dubai Mall and Mall of the Emirates to check on staff welfare.
Meanwhile, Kering, owner of Gucci, temporarily closed its boutiques in the UAE, Kuwait, Bahrain, and Qatar, and suspended business travel to the region.
Shares in major luxury conglomerates including LVMH, Hermès, and Richemont — owner of Cartier — fell between 4% and 6.5% as investors assessed the potential fallout.
A Growing Luxury Market at Risk
Although the Middle East accounts for just 5% to 10% of global luxury spending, analysts have described it as the fastest-growing luxury market last year. According to consulting firm Bain & Company, the region outperformed others at a time when high-end handbag sales stagnated elsewhere.
Now, airport closures and security fears threaten to derail that growth. Travel retail in the region is estimated at $5–6 billion annually. If disrupted for even a month, analysts warn that hundreds of millions of dollars could be at stake.
The impact may also extend to Europe. If Middle Eastern shoppers are unable to travel to shopping capitals like Paris or Milan, luxury sales in Europe could feel secondary effects.
Investments in Jeopardy
Luxury brands have invested heavily in the Gulf in recent years. Cartier recently unveiled a high-jewelry exhibition at Keturah Park in Dubai just days before the conflict escalated. LVMH last month staged a major Louis Vuitton exhibition at the Jumeirah Marsa Al Arab, while Sephora launched its first Saudi beauty brand.
LVMH’s finance chief previously described the Middle East as showing “significant growth,” though the group does not break out regional sales figures.
Beyond luxury, mainstream retailers are also reassessing plans. Primark had planned to open three stores in Dubai this spring, followed by expansions in Bahrain and Qatar. The company said it is closely monitoring the rapidly evolving situation.
Apple temporarily closed its Apple Stores in Dubai, according to its website, while Swedish fast-fashion retailer H&M shut stores in Bahrain and Israel.
Consumer goods giant Reckitt instructed employees across the Middle East to work from home, temporarily closed its production site in Bahrain, and suspended all regional business travel.
Uncertainty Ahead
With no clear resolution in sight and military tensions continuing to escalate, businesses across the Middle East face mounting uncertainty. For international brands that had viewed the Gulf as a pillar of future growth, the sudden disruption underscores the vulnerability of even the most dynamic markets to geopolitical shocks.
Whether closures remain temporary or evolve into longer-term retrenchments will depend largely on how quickly stability can be restored in a region that had, until recently, been one of global retail’s brightest spots.
