MENA Food Retailers Demand holds, margins take the first hit

Research evidence excerpt

MENA Food Retailers Demand holds, margins take the first hit

21 May 2026

MENA Food Retailers EquitiesConsumer Brands and Retail

Demand holds, margins take the first hit MENA

◆ UAE food demand remains resilient; rising costs to pressure Bulent Yurdagul*

margins as discretionary sales stay volatile Head of EEMEA Consumer Research

HSBC Bank Middle East Limited, DIFC

◆ Competition stays intense in KSA; discounters and e-grocery bulentyurdagul@hsbc.com +971 569445882

sustain promotions; price increase can offset some costs Neerav Agarwal*

Analyst, EEMEA Consumer

◆ We retain Buy on Spinneys; Hold on Al Othaim, Lulu, and HSBC Securities and Capital Markets (India) Private

Limited

Savola on sales growth pressure; revise TPs by -7% to +27% neerav.kumar.agarwal@hsbc.co.in

+91 0 80 30012510

UAE: demand holds, but margins take the punches first: The UAE food retail Vishal Mirwani*

backdrop for 2026 is likely to be shaped more by cost and supply-chain normalisation Associate

than by a further demand downturn. Food retailers flagged a material logistics shock at Bangalore

beginning of March but were able to maintain availability at quite high levels and protected

value perception by holding prices on essential lines, accepting gross margin pressure. * Employed by a non-US affiliate of HSBC Securities (USA) Inc, and is

Companies noted April/May trend improvement vs March, with higher-ticket categories not registered/ qualified pursuant to FINRA regulations

recovering from mid-April, albeit with elevated logistics costs. Companies remain focused

on scaling structural levers – loyalty, private label, and e-commerce – to support resilience

as discretionary demand slows down. We think pricing increases should partially offset

softer traffic gradually.