Retail companies operating in the Middle East and North Africa (MENA) region deal with over 500 million consumers, face varying market dynamics and regulations, resulting in a highly congested consumer journey with touchpoints fragmented across apps, retail platforms, social media, and physical stores.
Navigating this complex ecosystem comes at a time when the MENA region enters 2026 with regional governments pivoting from pure expansion toward a strategy of economic resilience, counteracting oil market and geopolitical volatility by accelerating AI adoption, securing critical supply chains, and refining non-oil revenue growth, according to a 2026 PwC report.
E-commerce growth
At the end of 2025, the Middle East ecommerce market was estimated at $155 billion, according to Mordor Intelligence, and on a trajectory to reach $177 billion in 2026. Leading were Saudi Arabia and the UAE, with the Kingdom alone commanding nearly 35 percent of regional revenue.
Marketplaces courted consumers with ultra-fast delivery promises, as merchants adopted embedded-finance tools that smooth checkout friction.
In the B2C sector, by device type, smartphones captured 72 percent of the Middle East and Africa ecommerce market share. By payment method, digital wallets accounted for 33 percent, with Buy Now Pay Later (BNPL) expanding at 14 percent annually.
By product category for B2C, fashion and apparel led with a 26 percent share.
By business model, the B2C segment held an 87 percent share, with B2B projected to post the highest annual growth rate at 16 percent during 2026-2031.
“Today, we make a mistake if we treat MENA as a single market. It moves at different speeds. The infrastructure exists, but maturity is uneven. Where infrastructure and policy enable it, digital becomes the operating system. Elsewhere, hybrid models will hold for longer, and that reality offers multiple opportunities for innovation,” said Julián Hernández, executive creative director with more than 30 years of experience, including experience in Asia Pacific and MENA.
Darius LaBelle, Managing Director, Middle East at November Five adds that “Those gaps are the reason AI-driven personalization fails to compound in many cases. Digital/data-first infrastructure isn’t a transformation project anymore. It’s the baseline for remaining commercially relevant.”
As 4G and 5G coverage expands in GCC cities, video-rich listings and augmented-reality try-ons boosted conversions as various retailers layered super-app features such as ride-hailing, food delivery, and peer-to-peer payments, enabling users to remain in-app from discovery to purchase.
Government-led cashless initiatives
Saudi Arabia’s Vision 2030 and the UAE’s national digital-economy agenda aim to migrate services online and normalize e-payments across daily life. Mordor Intelligence revealed that cash-on-delivery preferences have already fallen by 51 percent across MENA.
Fintech sandboxes run by Saudi Arabia’s SAMA and CBUAE allow wallets, BNPL, and even tokenized-payments to operate.
Expansion fulfillment infrastructure
The Future of Warehousing in the ME 2026–2030 report showed that people’s previous tolerance for a three-to-five-day delivery window had compressed into a same-day, and increasingly, sub-30-minute fulfillment.
Modern warehouse management systems are turning cloud-native and AI-driven, able to utilize predictive analytics to forecast demand surges based on local market trends, seasonal shifts, and geopolitical data. Private operators and sovereign funds are pouring capital into automated logistics hubs, dark stores, and temperature-controlled transport fleets, seeking to reduce last-mile distances and fulfil ultra-fast delivery promises, reshaping consumer expectations.
Online grocery and quick commerce in MENA is projected to grow at 20–25 percent annually, driven by urban demand and app-based delivery ecosystems, Statista reports.
“Inventory decentralization matters, but it’s the wrong starting point. The brands winning on delivery are moving stock closer to customers, but they’re also using demand signal data more intelligently to anticipate where stock needs to be before the order exists,” LaBelle said.
Dark stores and micro-fulfillment expansion are led in the region by top players like Talabat, Careem and Noon, most designed to serve 2–5 km delivery radii within 10–20-minute delivery windows, as cited by Reuters and regional business media.
“Speed is no longer a differentiator. Everyone can do it, so it no longer adds value. For premium products, speed can actually destroy value. Scarcity, anticipation, and a curated experience are part of the product. Immediate availability is not a logistics decision, but a pricing and positioning choice,” Hernández opined.
Social commerce
Platforms like TikTok Shop and Instagram have moved from being discovery tools to native sales channels, hosting entire checkout transactions in-app.
Influencer-led live shopping is expanding digital commerce rapidly, blending entertainment with instant purchase.
In many instances, however, social media users report being “de-influenced,” a trend calling for authenticity in a world that increasingly feels fake or artificial.
Influencers caught reading from an online teleprompter can get them in trouble with consumers, as content creators’ lines need to be delivered naturally.
What does this mean for brands? The average social media user is bombarded with hundreds of posts each day, where ads vie for a shrinking share of consumers’ attention span.
The best influencer brand content in 2026 needs to be geared less toward marketing and more towards a combination of entertainment, inspiration, education and usefulness, allowing consumers to make the leap to active buying.
Short-form content (15–60 seconds) excels on TikTok and Instagram reels, where every frame matters, while educational or in-depth content (8+ minutes) is more suited for YouTube.
Phygital marketing
In a world oversaturated with digital, phygital marketing is experiencing growth. People still want to shop in person. Nearly two-thirds of the truly digitally native Gen Z shoppers say they prefer the in-store experience to online, according to L.E.K. Consulting. It said that this generation of consumers places a high value on in-store shopping – more than millennials, Gen X and baby boomers.
“The MENA region has moved quickly in embracing digital retail. We often see customers discover products online first, then visit the store to experience them in person. Today’s customer moves naturally between digital and physical spaces, so both need to work together to create a seamless journey,” said Hassan Tamimi, Group CEO of Al Tannan Group Holding, and CEO of The Little Things, a pop culture retail concept that has redefined collectibles and fandom experiences across the GCC.
Armed with store review research, Gen Z shoppers seek the experience of tangible merchandise, in-store activations, as opposed to screen-dominated retail sales events.
Hyper-Personalization and AI
Armed with first-party data, brands are creating AI-powered digital twins of their customers to understand, predict and influence purchase behavior even before users type a search query.
AI has also moved into the agentic phase, where self-learning bots actively manage shopping lists and hunt for deals on behalf of the consumer based on search and buying algorithms.
Joe Abi Akl, head of the Retail and Consumer Goods Practice in the IMEA region at Oliver Wyman said: “E-commerce sales are expected to grow at a compound annual growth rate of more than 20 percent from the current level of $35 billion. Regional customers expect personalized products and services by 30 percent more than their global peers.”
Up to 75 percent of consumers are more likely to buy from brands delivering personalized content, according to McKinsey.
Compared to peer brands with low customization maturity, brands that excel at personalization are 48 percent more likely to exceed their revenue goals and 71 percent more likely to report improved customer loyalty.
Still, “AI is industrializing insight,” said Hernandez. “When insight is produced at scale, it stops being unique. What we call personalization today is often an averaged view of the customer, useful for targeting but not for real understanding. Personalization is an experience that builds trust in the brand, the process, and the product, not just a layer of targeting.”
AR/VR Role
Augmented Reality (AR) and Virtual Reality (VR) are two of the most exciting current digital marketing trends. Grand View Research reported in 2026 that the global VR market alone will reach $435bn by 2030, including hardware, software and associated services.
Through interactive experiences, brands are bridging the gap between digital content and real-world engagement. Consumers can now virtually test-try products, explore color variations and experience the brand’s products and services from anywhere, boosting convenience and conversion rates. Nearly 71 percent of consumers now say they’d shop more if AR were available, and over 30 percent of marketers are already integrating AR/VR into campaigns, according to Salesforce.
In physical stores, AR smart mirrors engage visitors by overlaying digital clothing or makeup, enhancing fitting room traffic and delighting customers.
Shopify’s data reveals that products featuring 3D/AR content see an average of 94 percent higher conversion rates than those without it. Brands employing AR, such as try-before-you-buy for visualization, have reported up to a 40 percent decrease in product return rates.
Return management
Online shopping usually entails more merchandise returns than physical sales. Between 15-30 percent of online purchases get returned, according to UAE-based 7Seas Matrix Logistics Services, a leading provider of comprehensive logistics solutions across the ME and beyond.
“Returns are a data problem dressed as a logistics one. Most reverse logistics costs trace back to poor product discovery, weak sizing guidance, and a complete absence of post-purchase CX design. The structural fix starts upstream: better data at the point of purchase, AI-assisted product matching, and experience design that reduces uncertainty before the order is placed,” said LaBelle.
Returns cost money in reverse shipping, warehousing costs, and processing time for refunds.
“Clear visuals, detailed product information, and strong storytelling help build confidence before the purchase. At the same time, retailers and logistics partners need smarter systems so inventory sits closer to demand and exchanges or replacements can happen quickly without hurting margins,” Tamimi said.
Fashion has the highest return rate due to size and fit issues, followed by electronics due to defective items. Smart businesses use technology to solve these challenges by putting in place inventory management systems that prevent stockouts, detect defects, automate order processing, reduce human errors and deploy data analytics to predict demand patterns.
“Customer satisfaction, not disappointment, requires better product pages, accurate sizing, and real representation. But retailers also need to be more selective in what they sell, championing fewer, better products with consistent quality. This requires discipline,” Hernández said.
Retailers leading the charge
The MENA retail and e-commerce ecosystem is led by a mix of global giants and regional powerhouses. Key players include:
- Amazon
- Noon
- Majid Al Futtaim
- Lulu Group
These players are winning through strong logistics networks, omnichannel integration and investment in retail media and data, not to mention engaging in partnership agreements involving retail networks, fintechs, and technology platforms.
Three global companies accounted for nearly $2.3 trillion in online sales in 2025. Amazon, Pinduoduo and Douyin, operated by ByteDance, topped the global e-commerce ranking by gross merchandise value (GMV) in 2025, according to ECDB data, a data-driven platform providing detailed insights, KPIs, and analytics on over 42,000 online stores and e-commerce markets worldwide.
Amazon remained on top with $845 billion of gross merchandise value (GMV), followed by Chinese Pinduoduo, which racked up $817 billion in GMV, allowing consumers to make team buying strategies, then Chinese Douyin at $648 billion, and TikTok Shop followed at $66 billion.
